March 16, 2011

 

 

Japan's earthquake has not had any impact on China's corn prices, and likely will not at least until the end of the month.

 

The disaster may strain already-low Japanese stocks of corn and soy, though it is still unclear whether its rice harvest season will be affected.

 

Japan is the world's largest importer of corn, accounting for 18% of global trade but maintains 95% self-sufficiency in rice. Analysts do not expect an immediate significant consequence on the regional grain market due to the disaster.

 

China is a net importer of soy and does not trade much rice. It exports virtually no wheat, though imports rose 36% last year.

 

Last year, China exported 27,488 tonnes of corn to Japan, with the smaller Asian nation accounting for about a fifth of China's corn exports. The volume is tiny compared with the 1.35 million tonnes a month of corn that Japan imports, mostly from the US. Furthermore, Chinese corn exports have been in decline: It has not exported any of the grain to Japan so far this year, based on available official data.

 

Unmoved by the quake, the most actively traded September corn contract on China's Dalian Commodity Exchange fell RMB7 (US$1.06) to settle at RMB2,398 (US$365)/tonne Tuesday (Mar 15).

 

Standard Chartered said in a research note that there will not be an immediate uptick in corn prices until Japan's orders firm up in second quarter.

 

"Price momentum in the week prior to the disaster was to the downside, and events in Japan have yet to change this," the bank said. "Overall, we expect grain prices to recover in second quarter from current levels before prices continue to trend down as global supplies improve."

 

Most of the tsunami-affected arable land in northeastern Japan is used for rice planting, and it is unclear how much the earthquake and tsunami impacted rice stocks, Standard Chartered said.

 

The rice planting season does not start until May, and runs through October, hence the crop outlook now depends largely on extent of damage and how quickly capacity can be restored, it said.