April 2, 2013

US corn exports to China may increase

Due to a shortage of high-quality grain, a projected increase in US corn exports  to China could benefit both countries, bolstering their already-strong trade relationship in agriculture.

Zhang Qi, an analyst with Yigu Information Consulting Ltd, was quoted on Thursday (Mar 28) as saying that China this year may need to increase corn imports to a record seven million tonnes. That would be near the government's limit and is due to heavy snow this winter that degraded the quality of grain, making it less suitable as animal feed. Corn has become an increasingly important commodity in China as prosperous citizens eat more meat, which requires more feed for poultry and livestock.

Colin Carter, director of the University of California's Giannini Foundation of Agricultural Economics, noted that a jump in corn imports from the US would solidify trade ties with China in farm products. The relationship has improved noticeably in recent years, he said.

"The US and China enjoy a strong bilateral relationship in agricultural trade," Carter said. "China is the number one market for US agricultural exports and the third-most-important source of US agricultural imports. Greater corn imports from the US will serve to heighten this relationship."

China in 2012 was the top market for US agricultural exports, with over US$23 billion worth of products bought, said Brian Mabry, a spokesman for the USDA. China is also forecast to be the number one importer for US farm goods this year, he said.

Chinese imports of US corn almost doubled in 2012 from the previous year, despite a severe drought that affected much of the US. Su Ye, head of market research of the Minnesota Department of Agriculture, while saying high prices for US corn would pose "an obstacle" to imports by China, pointed out that corn on US commodities markets has fallen 14% since a record high in August during the drought. Although China could buy cheaper corn from other countries, Ye said, the superior quality and food-safety standards of US corn justify the higher cost.

The University of California's Carter also sees the need to import corn as a sign that China might "move somewhat faster" in approving genetically modified corn for commercial production.

Large-scale introduction of genetically modified crops is regarded as an important step in China's efforts to feed about one-fifth of the world's population. China gave safety approvals to genetically modified rice and corn in 2009 but has not yet begun commercial production, despite spending billions of yuan on research.