March 7, 2012

 

China's corn supply seen sufficient in 2012

 

 

China will have ample corn supply this year due to a bumper harvest in 2011, said Ning Gaoning, chairman of state-owned grain trader COFCO Group.

 

Corn prices are very stable, he told Dow Jones Newswires on the sidelines of the National People's Congress, implying sluggish demand for imported corn due to high international prices. But in the long term, China's corn will be in tight supply as domestic consumption is increasing rapidly, he said.

 

He also said his company's corn import plans are uncertain, and its imports depend on availability on the domestic market.

 

Corn output in China rose 8.2% in 2011 to a record 191.75 million tonnes, according to government data.

 

Liu Yonghao, the chairman of New Hope Group, China's largest feed mill, said domestic corn prices are "comfortable," but the outlook for the second half of the year remains uncertain.

 

He urged the central government to liberalise imports and exports of feed grains or at the very least allocate additional corn import quotas directly to feed mills and animal producers.

 

China's 2012 corn import quotas totalled 7.2 million tonnes, unchanged from 2011, and with state-owned companies allocated 60% of the total. Actual corn imports for 2011 rose 11.5% to 1.7 million tonnes.

 

While some state-owned traders do not use up their corn import quotas, some private feed mills don't have allocations.

 

Liu said China's corn traders only import when global prices are much lower than those in the domestic market.

 

New Hope Group will be able to meet most of its demand with domestic corn this year, but it will consider importing if it still faces a deficit, he said.