April 21, 2006

 

China may become net corn importer by 2012

 

 

China could become a net importer of corn by 2012 as demand exceeds domestic supply and stockpiles dwindle, according a US government analyst.

 

China's diminishing corn stocks would soon come a point when the country would become a net importer because it needs feedstock, Phillip Jarrell, a grain analyst with the US Foreign Agricultural Service said on the sidelines of a corn conference in Beijing on Thursday (Apr 20).

 

China's corn reserves fell 68 percent from 102 million tonnes four years ago to just 32.6 million tonnes this year, according to data from the US Foreign Agricultural Service.

 

China is the largest producer of corn after the US. It ranks second in global pork and poultry production. Farmers' need for corn for use in animal feed would be more acute as demand for meat among China's 1.3 billion people rises.

 

Corn prices would average US$2 a bushel in the year ending September 2006, up 10 percent over the previous year, Jarrell said, citing the US Department of Agriculture's projections.

 

Higher world demand reduced US corn inventory by 11 percent this year and could push prices of corn futures up further, Citigroup analyst Terry Reilly said in a Mar 31 report.

 

The shortage would be made more acute as US corn production is expected to fall 4.6 percent from last year's bumper crop, he said. Rising demand for corn use in ethanol would also divert some of the supplies.

 

On top of that, Chinese meat production is rising. Meat production rose 5.7 percent to 76.5 million tonnes last year, according to information from the National Grain & Oil Information Centre.

 

More Chinese are expected to eat pork and almost double the number would eat beef, according to Noureddin H. Mona, the representative for the Food & Agriculture Organization in Beijing.

 

In the next five years, per capita pork consumption in China would rise by 11 percent to 41.3 kg while per capita beef consumption would almost double to 41.5 kg.

 

At the same time, grains are forming a smaller part of the food crops in China as fruits, vegetables and oil crops gained favour with farmers. Grains form 68 percent of the food crops grown in China, down from 79 percent in 1990.

 

China's grain demand would likely reach 550 million tonnes by 2010 but its output would unlikely exceed 520 million tonnes.