April 21, 2012
As demand for meat and feed grains expands along with its middle class, China may displace Japan as the world's largest corn importer as early as 2014, the US Grains Council said.
"It could be a matter of two to three years," Thomas Dorr, president of the council, said in an interview. "China has more than four million tonnes booked and delivered already." Japan bought 15.3 million tonnes last year, according to the country's agriculture ministry.
Imports by China, the second-biggest consumer after the US, are forecast to more than quadruple to four million tonnes in the 2011-12 from a year earlier, according to an April 10 report from the USDA. Inbound shipments may grow to a record 5.5 million tonnes in the year starting October 1, Dorr said. Rising demand could support futures, which have lost 4.8% this year on the prospect of record US output.
"To curb inflation in food products, the Chinese government may allow further increases in corn imports," said Kazuhiko Saito, an analyst at commodity broker Fujitomi Co. in Tokyo. "Expanding demand may limit losses in prices, although China alone cannot absorb all the expanding output globally."
Corn for July delivery traded at US$6.1525 a bushel on the Chicago Board of Trade at 12:09 p.m. Tokyo time. Futures fell to US$6.11 Monday (Apr 16), the lowest level for a most-active contract since March 30, on speculation favourable weather will bolster crops in the US, the world's biggest grower and exporter.
"I don't anticipate the corn market is going to go significantly higher relative to what we experienced over the last couple of years," Dorr said in Tokyo Monday. "If the weather is good, and we planted 95 million acres, the corn price is going to be pressured."
Futures traded as high as US$7.93 a bushel last year, nearing a record US$7.9925 reached in 2008, as demand growth led by emerging markets and ethanol production outpaced production, depleting stockpiles. Higher prices made traditional importers such as Japan and South Korea seek cheaper alternatives from the Black Sea region and Africa.
"Our biggest concern is a competition," Dorr said. Grain at US$6-7 "has stimulated interests in producing corn in places that we hadn't thought about before."
Japan may cut its reliance on US shipments to the lowest level ever after buying a record volume from Ukraine and Brazil, according to Nobuyuki Chino, president of Continental Rice Corp. in Tokyo. Japan's imports from the Black Sea area including Ukraine may jump to 1.8 million tonnes this year from about 55,000 tonnes in 2011, while buying from Brazil surged 46% last year, he said in an interview last month.
Imports by Japan, which dropped 5.5% in 2011, are unlikely to shrink further if food producers such as Nippon Meat Packers Inc. (2282) and Meiji Holdings Co. (2269) "capitalise on the market opportunities of China's demand for food," Dorr said.
Shipments last year declined to the lowest level since 1986 as a record earthquake and tsunami in March destroyed feed plants, and radiation from a crippled nuclear plant in Fukushima tainted beef. Imports reached a peak of 17 million tonnes in 2003.
Growth in Asia and other emerging economies means about one billion people will join the middle class by 2020, boosting demand for meat and dairy products as well as feed grains, Dorr said.