June 12, 2013
Chinadownplays talk of mounting corn imports
Think Tank China National Grain and Oils Information Centre (CNGOIC) downplayed forecasts of a huge rise in the country''s corn imports, but acknowledged the prospect of more soy purchases, pointing to the low potential of domestic output.
Wang Xiaohui, director of the market monitoring department at the state-run bureau, highlighted the pressure on the country to raise its corn supplies, in the face of rapidly-growing demand, from industrial as well as feed users.
"Higher income for consumers means more consumption of food," Wang said, told the International Grains Council (IGC) conference, pegging China''s feed use alone at 131.0 million tonnes in 2013-14, and industrial use at 19.0 million tonnes.
However, with the domestic harvest expected at 214.0 million tonnes, imports would be confined to 5.0 million tonnes next season, if a figure nearly doubles the 2.7% brought in during 2012-13. The USDA foresees China importing 7.0 million tonnes in 2013-14.
And further ahead, Wang said that while "strong industrial demand and livestock feeding" will further raise demand, domestic production will increase too to meet most of the extra demand.
"Corn area is expected to rise slightly above current levels over the next 10 years," he said, with improved agricultural techniques improving yields too, even assuming China maintains curbs on growing genetically modified varieties.
"China will still need to import 10 million tonnes to make up the difference," he said, a figure well below the 19.6 million tonnes that the USDA foresees for 2022-23. However, it concurs more closely with a forecast last week from the Organisation for Economic Co-operation and Development (OECD) and UN Food and Agriculture Organization that China''s imports of coarse grains overall, including the likes of barley and sorghum, will reach 13.2 million tonnes in 2022.
China''s prospects for corn imports are closely watched by markets given the country''s change from self-sufficiency to being a structural importer and, given the size of its needs, the potential for huge purchases if the domestic harvest falls short. China''s soy import prospects are also keenly monitored by investors, given the country''s status as the top buyer.
Wang forecast that China''s domestic soy production will remain constrained by plantings which are "projected to decrease" longer-term, squeezed by the country''s land constraints.
He also highlighted price signals, noting that "soy price changes have been smaller" in recent years than those of corn and wheat. With consumption by feed groups rising by some 3% a year, "more soy will need to be imported", he said. However, Wang stopped short of making a forecast for China''s import needs.
Wang also flagged the apparent anomaly between China''s ban on its farmers growing genetically modified (GM) crops and the country''s willingness to import such crops. "Every year, we import great volumes of soy from Argentina, Brazil and America. All imports of soy are GMO."
However, he stopped short of commenting on whether he believed an easing in China''s GM restrictions for its own growers is on the cards.