April 16, 2008

 

China unlikely to be net corn importer in next two years

 

 

China is unlikely to be a big corn importer in the next two years due to high global corn prices, Wang Xiaohui, an analyst at the China National Grain and Oils Information Center, said Tuesday.

 

New corn supply in China in the 2007-08 crop year, that started October, is expected to be 2.5 million tonnes more than the demand, Wang said.

 

China's 2008 corn output may rise 0.7 percent on-year to 149 million tonnes due to an increase in yield, despite a fall in planting area, according to CNGOIC's recent estimate.

 

The government's control over the industrial use of corn will further add to the surplus, said Wang.

 

Industrial consumption of corn is likely to reach 38 million tonnes in 2007-08, up 1.5 million tonnes on-year, he said.

 

Consumption of corn as feedmeal may rise in 2007-08 by 4 million tonnes, or 4.4 percent on-year, to 95.5 million tonnes, according to CNGOIC.

 

Meanwhile, corn exports in 2007-08 are seen falling 81 percent on-year to 1 million tonnes due to government controls.

 

However, corn prices will be supported by the government's reserve purchases, rising inflation, higher grain production costs as well as global corn prices, Wang said.

 

Corn prices are seen to face strong upward pressure in May and June, when feedmeal demand picks up and the possibility of drought increases in major planting areas.

 

Yet, they may lose momentum in July and August, as state sales of reserved corn starts and the harvest season approaches, Wang pointed.