July 14, 2011
China's 2011-12 corn imports seen at five million tonnes
China's corn imports are likely to climb more than two-fold in 2011-12 to five million tonnes from last year's 1.5 million tonnes, as a dramatic surge in demand outstrips domestic output.
Strong demand led by China, the world's second largest corn consumer, have led to tighter US stockpiles which are forecast to languish near 15-year lows, lifting the benchmark Chicago corn futures in recent weeks.
"China's corn demand is getting bigger as Chinese authorities take measures to push up pork supplies," a Singapore-based analyst said, who estimated imports at nine million tonnes.
China may have bought as much as five million tonnes of corn since March as it replenishes depleted reserves with most purchases coming after global prices slid from a record high of around US$8 a bushel reached on June 10.
Since then, a string of gains has helped corn erase its June 30 setback, when the USDA shocked markets with a bearish report on corn acres and production.
"The Chinese government has been restricting consumption but consumption by feed mills cannot be limited and remains robust," a corn analyst said.
A senior industry analyst has said that Beijing had set aside funds to buy between nine million and 10 million tonnes overseas to refill reserves, which have been falling to their lowest levels in years.
Some analysts doubt that China's corn imports would reach anywhere close to 10 million tonnes, the top end of estimates.
"Trading houses, feed mills as well as corn processors, all are sitting on large corn stocks," said a trading manager with a state-owned grain trading house in Jilin.
"Stocks by processors could be enough for two months while feed mills in the south also have enough stocks which should last until September."
The country is also sitting on a huge stockpile of wheat, some which could be used to replace corn in feed rations for animals.
China has been aggressively selling state reserves into the market for the last few years to cool the domestic market as it fights food price inflation.
Last week's corn auction brings total state sales this year to 3.25 million tonnes. The government sold a total of 27.44 million tonnes in 2010, 22.65 million tonnes in 2009 and 1.62 million tonnes in 2008, according to sources.