June 7, 2011

China's 2011 corn imports likely below 7.2 million tonnes 



China is unlikely to import more than the quota of 7.2 million tonnes of corn in 2011 despite growing inflationary pressure from rising meat prices, ANZ Bank analyst Nicholas Zhu said Monday (Jun 6).


In a special report analysing the impact of China's growing appetite for corn, Zhu estimated the country's total stocks to September 2010 at 44 million tonnes, giving a stock-to-use ratio of 27%.


He cited a recent purchase by China's grain stockpiler Sinograin of one million tonnes of corn as evidence of a growing demand gap in the country, which he pegged at 10 million tonnes.


"Sinograin's direct order suggests an unusual urgency to replenish diminishing corn inventories," he said, citing figures suggesting the government auctioned 27.5 million tonnes of corn from its reserve stock in 2010.


China has become a key driver in the world corn market as the country's rapidly-expanding middle class has developed a growing taste for meat.


Total feedstock use has grown steadily to 150 million tonnes in 2010 and is projected to reach 250 million tonnes by 2020. Sinograin's chief executive estimates that 60% of the corn crop is directed to feedstock to satisfy the growing protein needs of an increasingly prosperous population.


Its demand will be particularly important in the upcoming 2011-12 season as farmers in the world's largest exporter the US are struggling to plant their crops in waterlogged soil and world stock levels are near historical lows.


Zhu estimated that a surge in the price of pork, which he said could hit 40% on-year in May, is likely to have pushed up the consumer price index 1% over the month. Pork accounts for over 60% all meat consumed in China.


Yet he said the government is unlikely to exceed its set import quota in 2011 of 7.2 million tonnes. Last year, the country imported 1.57 million tonnes of corn, according to government data, all of which was used for feedstock.


Instead, he forecasts that the government will move to limit industrial corn use, which currently exceeds the government target at around 30% of demand, by limiting bank financing for non-reserve purposes and tightening environmental standard for plants processing the grain.

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