July 15, 2010

China may remain net corn importer this year

China, the second-largest corn consumer in the world, will likely remain a net importer of the grain for a second year as bad weather has hurt the domestic harvest, Bank of America-Merrill Lynch said.

Imports may be at least 2.3 million tonnes in the year beginning Oct 1, as demand exceeds production, said Timothy Bush, a vice president at Merrill Lynch. China is forecast by the USDA to import one million tonnes in the year ending Sept 30, up from 47,000 tonnes a year earlier.

Rising imports by China may help drain excess global supply, supporting prices that have slumped 6.3% in Chicago futures this year. China is boosting purchases as inventories in the US, the largest grower and exporter, are forecast to drop Aug 31 to the lowest since 2007, and will decline further next year, the USDA said.

"I simply don't see any way that China has upside to corn output in 2010," Bush said at a briefing, citing delays in sowing caused by cold weather, flooding in some growing regions and drought in the northeast part of the country.

China's production will likely lag behind demand as areas planted to the grain drop 1.5% and demand expands 3.4% this year, Bush said.

The US had outstanding sales of 890,200 tonnes of corn to China as of July 1, and has exported 120,600 tonnes to the Asian nation this year, the USDA said July 9.

China's corn imports may be as much as three million tonnes this year, as it rebuilds stockpiles drained to help cool domestic prices, analysts said.