December 17, 2010

China's 2011 corn imports may set record

China may boost next year's corn imports as much as fivefold from 1.5 million tonnes this year to a record 7.4 million tonnes, the US Grains Council said.

Chinese officials are "aggressively" trying to add Argentina to its alternative suppliers as domestic reserves dwindle, potentially boosting competition for exporters in the US, said president of the industry group Thomas Dorr.

China's corn output may be 172.5 million tonnes this year, a 5.2% gain from 2009, the China National Grain & Oils Information Centre said, raising its forecast by 3.5 million tonnes from a month ago.

China is more likely to use imported corn next year because the government hasn't bought a temporary reserve of the grain to cover possible shortages, analysts said.

Still, the government may not let corn imports gain "in the scope that has emerged in the soy industry," Dorr said. China's soy imports surged fivefold in the last 10 years, and it now imports about 80% of its consumption, according to USDA data.

Imports of 7.4 million tonnes of corn would represent an increase of almost 15% in demand for US corn exports, if China bought entire amount from the US, Dorr said. Under the terms of its World Trade Organisation membership, China agreed it would allow imports of up to 7.4 million tonnes of corn at the lowest tariff rate.

China is working to begin imports from Argentina, and trying to complete a so-called Pest Risk Assessment that will enable the country to commence buying from the world's second-biggest exporter, Dorr said

Argentina expects to reach an agreement on corn sales to China in the first half of 2011, Minister of Agriculture Julian Dominguez said December 1.