Experts say China may buy at least 2 million tons of corn from America

BEIJING - China is hungry for more corn. To feed the need, experts predict the world's second-biggest corn consumer will import record amounts of corn from the United States this year.

Ding Shengjun, a senior researcher at the Academy of State Administration of Grain, said China needs to import at least 2 million tons of corn from the US this year to stockpile and rotate its corn reserves.

"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 unfavorable weather conditions.

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

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

The US, the world's largest producer and consumer of corn, is China's biggest agricultural supplier. It accounted for 27 percent of China's import market of food last year, reported the Global Trade Information Services, an international economic development agency that provides market information and trade data.

Lu Jingbo, director of the department of macro-control and adjustment from the State Administration of Grain, said China needs to maintain a certain quantity of corn imports to supply its booming corn and animal feed processing industries.

"More than 75 percent of corn is being consumed in deep-processing industries of animal feed, ethyl alcohol and starch in China," Lu said. "The industrial consumption has far exceeded food consumption demand now."

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

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

But China only imported a bit more than 14,000 tons 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 managesChina'scentral government reserves, has signed deals to import 1 million tons of corn from the US. The delivery is due between July and August, said Cheng Bingzhou, the spokesman for the company.

US food giants Cargill and Archer Daniels Midland Co, which brokered a major chunk of the corn trade between China and the US, did not respond to requests for comments.

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

Percy Misika, China representative from the Food and Agriculture Organization of the United Nations, told China Daily that China is expected to import a little less than 2 million tons of corn from the US in 2011. But it would still make for another record year for China's maize 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 tons in 2010, an 8 percent year-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 2 million tons to 10 million tons in the next five years to meet the domestic market demand," said Sam Niu, assistant director of the US Grains Council Beijing office.

"And the US corn may take 80 percent or more market share, which is what we would like to see and expect in the near future."

Nicholas Kalaitzandonakes, a professor of agricultural economies at University of Missouri, feels China is willing to import more corn and distiller's dried grains with solubles from the US this year.

"If we compare to other major international corn producers, the US definitely has quality guarantee, advanced logistics system, price advantage and sophisticated grain merchants to help the corn trade, which would bring mutual benefits to both nations," he said.

The Office of the Agricultural Marketing Service of the US Department of Agriculture 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 tons), 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 maize produced in the US and this could be another issue to discuss before the next round of Chinese purchases," Kalaitzandonakes said.

Lu Bu, a researcher at the Chinese Academy of Agricultural Sciences, said the annual corn output of the US is much higher than other countries, citing agriculture as a major industry in the US. China also has strong agricultural ties with the US and imports corn in large quantities. Thus, the US is always the first choice when China places an order.

"China's continuous increase in corn imports shows the government is paying more attention to available foreign resources that can meet its domestic needs," Lu said.

He said limited available arable land, scarce water resources and rapid urbanization have all affected China's annual corn capacity.

"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."

China Daily