March 17, 2008

China as net corn importer in 2008 unlikely, analysts

Chinese analysts expressed doubt on the recent projection of the Iowa State University that the country will become a net corn importer in the 2009/2010 production year.

The Iowa State University said that China's corn imports will reach 2.6 million tonnes per year by the 2017/2018 production year.

Analyst Wang Cheng with Nanhua Futures said China's corn market has been balanced in recent years, and is expected to remain stable for the next few years as the government imposes restrictions on corn exports.

China's feed corn use will surge by 14.4 million tonnes over the next 10 years, and corn processing demand will rise by 8.8 million tonnes over the same period, the Iowa State University previously said.

However, Wang pointed that the domestic corn processing industry is under strict government controls. If this policy is continued over the next few years, industrial corn use will not rise significantly.

Meanwhile soy cultivation in northeast China is expected to surge this year from last year, due to the high profitability of soy, while corn acreage is expected to fall.

Analyst Jiang Yang from Heilongjiang Tianqi Futures said that China's corn production this year might not rise significantly from last year's level.

Jiang reiterated that corn imports would be a small fraction of total domestic consumption. He said that although corn production for this year and the following year remains uncertain, the international corn market will have limited impact on the domestic corn market.

Corn futures closed higher on the Dalian Commodity Exchange (DCE) on Friday. The most traded September corn delivery gained 0.22 percent to end at RMB 1,817 (US$256.34) per tonne.