September 15, 2010

China downplays sharp 2010 grain imports

Top Chinese economic officials have in recent weeks issued a string of assurances about China's grain self-sufficiency, downplaying a surge in grain imports this year that could portend a potentially seismic shift in the global grain trade.

Because of China's economic size, such a change, even by small degrees, could mean millions of tonnes of grains diverted to the Asian giant, setting off far-reaching changes in global shipping and grain production trends.

The latest assurances, reinforcing those from other senior government officials, came Tuesday (Sep 14) from Zhang Xiaogang, deputy director of the National Development and Reform Commission, the country's top economic planning agency.

"Apart from soy, imports of wheat, corn and rice have been small, not even 1% of the country's domestic output," Zhang said, adding that grain prices basically will not be affected by the global market.

In fact, China's grain imports have risen sharply this year.

Official data for the first seven months showed wheat imports at one million tonnes, double the level seen in the same period a year earlier. Over the same period, corn imports have risen nearly 62 times to 281,971 tonnes.

Additionally, customs data understate import levels by including only out-of-quota shipment volumes, analysts say. So far this year, corn imports from the US have in fact exceeded one million tonnes.

Despite the potential impact of the rise in import numbers, however, the trend may not be immediately visible in prices.

The government uses its grain reserves, the world's largest, to buffer domestic grain market volatility, and has so far succeeded in staving off a series of corn, wheat and other food price rallies this year.

China does not officially disclose its grain reserve levels, but the stockpiles are estimated at 45% of output levels.