May 17, 2006

China's growing corn imports could trigger price hike

Growth in Chinese corn imports could trigger a strong turnaround in prices, Michael Lewis, global head of commodities research at Deutsche Bank said Tuesday (May 16).

"Over the next 18 months we expect China will move from becoming a net exporter of corn to a net importer," he said. "History would suggest that such a shift in the country's trade position is likely to trigger a strong turnaround in corn prices," he added.

Speaking at the Dow Jones European Commodity Investment conference in Frankfurt, Lewis said China's accession to the World Trade Organization, strong gross domestic product growth and urbanisation have helped to double agricultural imports into the country since 2002.

"The most noticeable growth in Chinese agricultural import volumes over the past few years has been in soybeans," he said. But bird flu remains a risk into 2006 since 75 percent of Chinese corn demand is related to animal feeds, Lewis noted.

"However, the lion's share of this is earmarked for cattle and not poultry consumption," he added.