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China corn imports may exceed

CHICAGO : China may need to import five times as much corn as the US government expects over the next year, an indus

Published October 4, 2011 Updated October 4, 2011 09:25pm

3 min

By Muhammad Iqbal

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The US Grains Council, which just completed a crop tour in China, said the record harvest won't be enough to meet demand in the world's most populous nation, where expanding consumption of meat is undermining decades of self-sufficiency and helped fuel the record surge in prices earlier this year.

"In spite of the current economic pressures, there is evidence of strong and increasing demand for higher quality protein diets," said Don Hutchens, executive director of the Nebraska Corn Board, who was on the China tour that sampled more than 300 fields in late September.

The USGC, which lobbies on behalf of US exporters, said initial yields suggested a 2011-12 Chinese corn crop of a 167 million tonnes, which it said was a record. It estimated consumption at 170.1 million tonnes.

As a result, in order to cover its domestic production shortfall and replenish stocks, China will need to import 5 million to 10 million tonnes of corn from exporters like the United States in the 2011/12 season, the USGC said.

That is far more than the current US Department of Agriculture estimate of 2 million tonnes, which itself would be the most in 17 years.

As recently as two weeks ago corn was lifted by rumours that China had purchased up to 5 million tonnes of corn from the United States, only to start sliding after the rumours were not confirmed.

Traders have been on alert for more deals since last year, when China bought US corn for the first time in four years, helping spark a rally that helped drive US corn futures to an all-time high near $8 a bushel in June.

Prices have since dropped below $6, but traders expect China will return to the world market for corn at some point as it yields to the ever-rising need for imports, putting more strain on global food supplies at a time when inflation is gnawing away at growth and the world population nears seven billion.

The United States is the world's biggest corn supplier, but US stocks are projected to remain tight this year after hot summer weather cut US yields.

Apart from the United States, only Argentina, Brazil or the Black Sea region could supply China with such large amounts of corn, but only the United States, Thailand and Peru have the necessary customs clearances to do so.

China shipped more than 1.1 million tonnes of US corn in the 2009/10 marketing year and nearly 1 million tonnes in 2010-11, according to USDA data. China has bought 845,800 tonnes so far for delivery in 2011-12, of which 305,700 tonnes has already been shipped, USDA data showed.

In March, USDA announced the sale of 1.25 million tonnes of corn to an unknown destination that traders widely believed to be China.

Tom Dorr, president of the US Grains Council, said China's domestic use of corn has exceeded production in six of the last seven years.

"This is clearly why China has emerged as a buyer of corn," he said. "If our production estimates are correct, they will once again exceed (production) by approximately 3.5 tonnes."

The council projected China's harvested area for corn at 76.35 million acres, or 30.9 billion hectares, and estimated the average yield at 85.9 bushels per acre, or 5.39 tonnes per hectare. Most of China's corn crop 60 to 80 percent is harvested by hand, Hutchens said.

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