December 1, 2010

 

China seen importing less corn, more soy in 2011

China will import only a small volume of corn in 2011 amid a record domestic harvest, but imports of soy will continue growing in coming years, according to China's top grain trader Cofco Ltd.

 

There will not be dramatic food shortages in China, even though food prices helped drive the country's inflation to a 25-month high in October, said Cofco chairman Frank Ning.

 

China has this year bought about 1.5 million tonnes of corn from the US, the largest volume in more than a decade, triggering expectation that the world's second-largest corn consumer would import more as its demand is growing faster than output.

 

"It's very much up to the policy in China, how much they will allow or increase the industrial use of corn," said Ning.

 

During recent years, Beijing has restricted expansion of the corn processing industry, which produces starch and sweeteners. It has also banned corn-based fuel ethanol.

 

Ning did not give an estimate of China's corn harvest, but said the large harvest could soften prices, which hit a record level last month, partly driven by excessive liquidity.

 

The China National Grain and Oils Information Centre has estimated this year's corn harvest at a record 169 million tonnes, up 3.1% from last year.

 

Meanwhile, China, which already buys about 60% of the world's traded soy, will continue to import the oilseed, which is crushed into edible oil and soymeal, a protein-rich feed ingredient.

 

Soy imports from the US, Argentina and Brazil will grow by 5-7% a year, or one to three million tonnes on top of the 54 million tonnes expected to be imported in 2010, Ning forecast.

 

Some Chinese companies have been investing, particularly in Brazil and Argentina, to grow soy in order to ensure supplies of the oilseed.

 

"It is still very debatable whether a company like Cofco should grow soy in other countries," said Ning.

 

Still, China's soy imports would be ensured as high prices would encourage farmers, particularly in Brazil to grow more.

 

"As long as long as the price is right, Brazil has a lot of potential to supply and half of the Brazilian soy in the past was supplied to China," said Ning.

 

China, which is struggling to ensure its food supply, has limited land to grow enough soy, which competes for land with rice and corn.

 

"I think the key is technology, so using technology to produce more on the same land and maybe agricultural policy to give more incentive to the farmers to grow more to increase their productivity," he said, adding that the government is already doing so, but there is still room for improvement.