September 4, 2010

China may boost 2010-11 corn imports more than three-fold

China, the second-biggest user of corn, may increase imports more than three-fold in 2010-11 to meet demand and help cool prices, according to analysts.

The country may buy 4-5 million tonnes, analysts said. Accumulated US exports to China were 1.16 million tonnes and outstanding sales 174,000 tonnes as of August 26 for the year ending August 31, according to USDA data.

China has been buying US corn and selling from state stockpiles to curb prices that have advanced 15% in the past year on the Dalian Commodity Exchange. Imports may exceed 10 million tonnes by 2015, analysts said.

While China's production will match demand this year, analysts said that the government still needs to buy from farmers to replenish stockpiles. Output in 2010 may increase by 22.6 million tonnes to 158 million tonnes from last year.

Supply will "basically meet demand," even in years when poor harvests tighten the market, Liu Xiaoyu, general manager of Cofco's feed division, said. As the country implements a plan to boost grain output, a deficit "may not be the norm," Liu said.

Liu noted that it is not possible for China to treat corn like soy, which rely mainly on imports. Niu Yishan from the US Grains Council (USGC) said in response that it was hard 10 years ago for people to imagine soy imports would exceed 50 million tonnes.

Meanwhile, China's corn prices will more be influenced by world markets in 2010-11 as imports become more regular, analysts said.

The price for the new harvest will start near the current spot price in Jinzhou, or about RMB1,990 (US$292) per tonne, adjusted for quality. The procurement price in the main northeast growing areas will be about RMB1,650-1,850 per tonne when the harvest starts, analysts said.

Earlier, corn for May delivery advanced 0.3% to RMB2,020 per tonne on the Dalian Commodity Exchange late on Friday (Sep 3).