December 13, 2012

Due to high US prices, Chinese corn imports are expected to fall by more than half next year, and a rise in overall consumption will put domestic supplies under more pressure despite another record harvest.

The China National Grain and Oils Information Centre (CNGOIC) said imports by the world's second largest corn consuming nation are expected to fall to 2.4 million tonnes in the 12 months ending in September 2013, down 54% on-year, after a drought-driven price surge caused a halt in purchases from the US.

Meanwhile, consumption was expected to rise 9.6% to 205.6 million tonnes as a result of an expansion in hog herds. China's domestic corn harvest rose 8% this year to a record 208.13 million tonnes. CNGOIC said China was unlikely to import any corn at all until April 2013, depending on domestic and overseas prices.

The worst drought in decades in the US has driven up US corn prices, which are around 4% higher than domestic corn prices quoted in the southern city of Shenzhen. Domestic corn prices weakened after the record harvest, and corn processors have kept production relatively low as a result of poor sales of downstream products such as starch and alcohol.

China will import corn from Argentina and Ukraine on a trial basis during the year, CNGOIC said. A Chinese feed mill in the northern province of Shandong has bought 48 tonnes of Argentina corn which cleared customs in November, traders said.

In September, the CNGOIC said corn imports in calendar 2013 may plunge more than 80% from this year's estimated purchases to a total of one million tonnes.