May 13, 2005

US Grains Council assesses Asian markets

Having returned from a tour of Asia, US Grains Council (USGC) president and CEO Kenneth Hobbie said that China will rapidly become a net importer of corn over the next few years and cause a change in US trading patterns over the next two or three years.

According to USDA, China's exports of corn have dropped from 15.2 million tonnes in 2002-03 to a projected 4 million tonnes for 2004-05 while imports this year are projected at 200,000 tonnes.

Besides China, the USGC also visited three other countries in March, Indonesia, Malaysia, and Vietnam to evaluate the economic developments there and the level of market-building efforts needed. Vic Miller, USGC treasurer said lack of infrastructure continues to be a major problem overall, but is not an insurmountable one. Containers shipments instead of bulk shipments would be the best bet.

He said that the entire region has a high demand for value-added corn, and with economies starting to recover, importers are looking for the traits that US corn producers provide. People are also increasingly seeking more protein sources, which means more livestock feed will be needed.

Though governments will give added incentives to their local growers, the total local corn grown will hardly present itself as competition for corn of US origin. Even in China, 250 million people are expected to relocate from rural areas into coastal cities over the next 15 years, causing a huge increase in demand for protein.

In Malaysia, USGC recommended that research programs show the benefits of feeding high quality corn the to the livestock and broiler industries. In addition, the council wants to work with consultants to show the opportunities of importing container shipments during this time of high freight rates.