June 14, 2011

 

China requires at least two million tonnes of US corn for 2011
 

 

China needs to import at least two million tonnes of corn from the US this year to stockpile and rotate its corn reserves, said Ding Shengjun, a senior researcher at the Academy of State Administration of Grain.

 

"China has consumed a large number of corn in recent years, and the government must ensure it can gain adequate supplies to prevent the inflation of corn caused by unpredicted shortages of preservation, speculation and unfavourable weather conditions.

 

"Importing the corn from the US is a practical way to stabilise the domestic price of corn and balance the demand and supply," he said.

 

In 2010, China imported 1.5 million tonnes of corn from the US, out of the 1.57 million tonnes of China's total corn imports, the most in about 14 years, according to General Administration of Customs.

 

"More than 75% of corn is being consumed in deep-processing industries of animal feed, ethyl alcohol and starch in China," said Lu Jingbo, director of the department of macro-control and adjustment from the State Administration of Grain. "The industrial consumption has far exceeded food consumption demand now."

 

China National Grain and Oils Information Centre reported that more than 100 million tonnes of corn were used by the livestock industry in 2010, a 27% increase from the previous year. Chinese producers of bio-chemicals also consumed 54 million tonnes of corns in 2010, up 12% from a year earlier.

 

Last year, China produced 150 million tonnes of animal feed products and also exported them to a number of countries, such as Mongolia, Australia and New Zealand, according to the Centre of China Agriculture for Trade and Economy of the Ministry of Agriculture.

 

But China only imported a bit more than 14,000 tonnes of corn from January to April, which analysts said means the country may make big purchases in the second half of this year.

 

In March, China Grain Reserves Corporation, which manages China'scentral government reserves, has signed deals to import one million tons of corn from the US. The delivery is due between July and August, said Cheng Bingzhou, the spokesman for the company.

 

The US food exports to China came with China's growing demand for agricultural products, nearly tripling over the past six years to US$17.8 billion in 2010. Highest on China's list of imports from the US include corn, soy, cotton and processed animal feed.

 

Percy Misika, China representative from the Food and Agriculture Organisation of the United Nations, said China is expected to import a little less than two million tonnes of corn from the US in 2011. But it would still make for another record year for China's corn crop import from the US.

 

China's major corn producing areas are in the northeastern and central regions. The country's corn output reached 177 million tonnes in 2010, an 8% on-year increase.

 

"The increasing corn production may not meet the increasing demand in China at the moment, and especially in the next three or five years. And China may have to import from two million tonnes to 10 million tonnes in the next five years to meet the domestic market demand," said Sam Niu, assistant director of the US Grains Council Beijing office, adding that the US corn may take 80% or more market share.

 

The Office of the Agricultural Marketing Service of the USDA also estimates that China will still be one of the main international corn buyers in 2011.

 

The US corn production for 2011 is projected at a record 13.5 billion bushels (343 million tonnes), up 1.1 billion bushels from 2010 as a 4-million-acre increase in intended plantings and a recovery from last year's weather-reduced yields boost expected output.

 

"But China is still cautious of viewing transgenic corn produced in the US and this could be another issue to discuss before the next round of Chinese purchases," analysts said.

 

Limited available arable land, scarce water resources and rapid urbanisation have all affected China's annual corn capacity, said Lu Bu, a researcher at the Chinese Academy of Agricultural Sciences.

 

"The drought occurred in China's central and eastern regions may push the price up on corn, even though these regions are not major corn producers," he added.

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