March 23, 2007

China may halve corn exports this year

China may halve its corn exports this year to cater to its growing meat industry and its multitude of corn-reliant industries.

Corn exports are forecast to fall 44 percent to 2.5 million tonnes in 2007/08 from 4.5 million tonnes in the current year ending in September, according to Jiang Jianhua, vice chairman of Jilin Grain Group Co said. 

Jilin Grain Group and China National Cereals, Oils and Foodstuffs Corp. are the only two companies allowed to export grain from China.

The Chinese government has resisted giving out export quotas to the two companies as it waits to assess this year's crop, meaning China has not exported any corn so far this year. 

This meant importers traditionally reliant on China's corn, like South Korea, would likely have to source for corn in the US or Latin America.

The announcement also means that worldwide supplies this year, already forecasted by the USDA to be the lowest in 28 years, would shrink further. Meanwhile, corn prices have already risen 87 percent in the past year.

Economic growth in China has boosted consumer incomes and led to a more meat-based diet, which in turn created more demand for corn from the meat industry to feed its animals. Corn to be used for ethanol production is also sucking up supplies. Industrial use of corn has increased by 15 percent a year over the last decade.

China's corn production is expected to rise 1.4 percent to 146 million tonnes this year, according to the China National Grain and Oils Information Centre.

Meanwhile, demand is forecast to rise 2.9 percent to 141 million tonnes in the year ending September, according to the USDA.