July 27, 2012

China's H1 2012 grain imports surge

In the first half of 2012, the grain imports of China soared 41.2% on-year to 40.85 million tonnes, with corn and wheat crops as the major growth factors, as shown from the General Administration of Customs' latest data on Monday (July 23).

Against the backdrop of a sharp rise in international grain prices caused by global extreme weather, such large imports will be favourable for the stable running of the domestic grain market in the second half, analysts say.

The Customs data shows that China imported 29.05 million tonnes of soy in January-June, up 22.5% on-year. Meanwhile, its corn, wheat, barley, and rice imports, respectively came to 2.4 million tonnes, 2.19 million tonnes, 1.51 million tonnes, and 1.19 million tonnes, surging 6,535.2%, 294.9%, 62.3%, and 226.9% over the same period of last year.

Bargain-hunting is one reason for the robust rise of imports. International grain prices rebounded mildly in the first quarter but then fell persistently in the following three months.

In the first half, China's grain imports volume outgrew the value, which also indicated that average import prices dropped on an on-year basis.

However, since the middle of June, stubborn hot and dry weather in the US mid-west has aroused worries over its corn and soy output. The USDA also revised down its estimates of the output of major crops. Pushed up by weather concerns, nearby corn and soy contracts on the CBOT have climbed 57% and 33% in the past one and half months. Its September wheat contract also soared 43%.

Besides bargain buying, the expansion of China's domestic breeding industry also helped boost soy meal and corn demand and led to an increase in imports.

Given the strong rise of international grain prices in July, China is expected to slow down the pace of imports in the following months, insiders note. The ample supply of corn, soy, and wheat will promote the stability of the domestic grain market, and the international grain market is anticipated to continue to outperform the home market.