December 8, 2014

 

China cuts corn imports by 400,000

 

 

China's current clampdown on biotech-tainted corn is part of a bigger plan to significantly reduce corn imports, the Beijing bureau of the US Department of Agriculture says.

 

Citing the continued refusal of China to allow corn shipments from the US over claims they contain a genetically modified variety approved in Washington but not Beijing. the bureau has revised down by 500,000 tonnes to a four-year low of 2.5 million tonnes its forecast for Chinese corn imports in 2014-15,

 

While imported corn is cheaper by CNY1,000 (US$162) a tonne than domestic supplies, as measured in the port of Guangdong, "biotechnology related trade restrictions continue to disrupt trade," bureau said.

 

Indeed, the bureau warned of the potential spread of the Chinese curbs from US supplies to other origins.

 

"China's slow biotechnology approval process has restricted imports from the United States and may impact Brazil and Argentina."

 

The bureau also said Chinese officials seem determined to find other feed grains to replace imported corn in feed production. The alternatives being considered are Australian feed barley, US sorghum and Thai cassava.

 

In fact Chinese imports of sorghum soared from 631,000 tonnes in 2012-13 to 4.16 million tonnes last season. They are even expected to hit 4.3 million tonnes in 2014-15.

 

"The rapid increase in sorghum imports has attracted government attention," the bureau said. "Quarantine and inspection officials have reportedly been instructed to strengthen quarantine inspection on sorghum imports. "

 

"According to Chinese importers and feed mills, some major suppliers are now reluctant to sell to China due to concerns about possible trade disruption."

 

The comments come amid mounting ideas on Chinese corn inventories, with analysis group Cngrain.com reportedly this week estimating the stockpile ending this season at more than 120 million tonnes, equivalent to more than half a year's consumption.

 

The USDA bureau pegged inventories at a record 79.7 million tonnes, 2 million tonnes above the department's official estimate, helped by a 2014 harvest which, while 4.5m tonnes lower than last year, is of higher quality, meaning the "amount of useable corn will likely be similar".

 

The Chinese government "is expected to continue putting pressure on corn imports as it looks for ways to draw down large and expensive domestic stocks," the bureau said.

 

"At the same time, the government is unlikely to allow corn prices to fall enough to allow the market to clear, sustaining strong import demand for alternative feed ingredients."