April 30, 2012

China's corn imports may reach almost six million tonnes

The corn imports of China may increase 50% to nearly six million tonnes in the next International Grains Council (IGC) marketing year that begins July 1, the council said Friday (Apr 27).

The IGC kept China's corn import forecast unchanged for 2011-12 at four million tonnes.

The country's corn imports are forecast to rise for a fourth consecutive year due to strong domestic demand, high local prices and high transportation costs from northern growing areas to the south, making imports from the US or Argentina cost effective, it said.

With local prices close to record highs and US export prices lower, there is speculation that China may have already bought as much as two million tonnes of new crop US corn that will be harvested from August, the IGC said.

Private importers in China may also have recently bought up to 700,000 tonnes of corn for near-term delivery, it said.

Earlier this month, old crop domestic corn was quoted around US$385/tonne in Dalian, and values further south in Guangzhou were around US$406/tonne, the IGC added.

US corn for June shipment is currently being offered around US$326-$330/tonnene, cost-and-freight, which is economically viable even after factoring in the 14% taxes, traders said.

The IGC also revised up its forecast for China's wheat imports in 2011-12 by 5% to 2.1 million tonnes, more than double the one million tonnes of actual imports in the previous year.

Rains across most of the North China Plain and northeast were beneficial for winter wheat in the reproduction stage and for the germination of spring wheat, but some areas, notably Sichuan province, remained too dry, the IGC said.

Based on average yields, the total wheat acreage is projected to be similar to last year at 24.3 million hectares, while production is forecast at 116 million tonnes in 2012-13, down from 117.9 million tonnes in the previous year.