China's corn potential makes imports 'improbable'

by Agrimoney.com

Expectations that China will become a major corn importer are as misguided now as they were a decade ago, thanks to the potential to lift its own output, the head of the country's grain think tank said.

Weilu Yang, deputy director of the National Grain and Oils Information Centre, termed "improbable" the idea that the country will become ever-more dependent on imports to feed its growing demand for corn.

China's potential to meet its own needs was evident in comparing its own productivity with that of the US, the top corn producer.

"Our corn area is the same as the US. Yield is only half as big as the US," he told global grain leaders.

"This suggests there is great potential to lift yield," and output.

Indeed, the country's corn production was already increasing "substantially", meaning "China's demand does not require large imports".

'Rise of several times'

The prospect of China, the world's second ranked corn consumer, turning permanently to imports has been a subject of considerable interest on grain markets, fuelling jumps in Chicago futures prices.

And Mr Weilu's comments clash with thinking from many international analysts, and some private observers in China, that the need for feed to grow livestock production, and meet the demand of an expanding and wealthier population, will force China to turn to foreign supplies.

A week ago, Rabobank analyst Pan Chenjun, who is based in Beijing, said that China's corn imports may in 2011 "be several times larger than last year", when the country's corn imports hit 1.6m tonnes, their biggest since the 1990s.

"The [demand] pressure on corn is coming from large hog farms that are entering the industry, while small farms are exiting the industry," Ms Pan said, forecasting China's hog population rising 1% this year to 453m head.

However, the United Nations Food and Agriculture Organization on Tuesday supported the idea of limited Chinese imports of coarse grains ahead, given bumper crop prospects.

"In China, with a record [corn] crop in 2010 and expectation of another bumper crop in 2011, imports are estimated to decline to 1 million tonnes in [2011-12] from an estimated 2m tonnes in 2010-11," the FAO said.

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