April 20 (Bloomberg) -- China will probably become a net importer of corn by 2012 as demand exceeds domestic supply and stockpiles fall, while prices could rise 30 percent in a decade, according a U.S. government analyst.

``China's corn stocks are falling,'' Phillip Jarrell, a grain analyst with the U.S. Foreign Agricultural Service, said on the sidelines of a corn conference in Beijing yesterday. ``There will come a point soon when China will become a net importer because it needs feedstock.''

Reserves of corn held in China have dropped from 102 million tons in 2000-2001 to 32.6 million tons in 2005-2006, a decline of 68 percent, according to data on the U.S. Foreign Agricultural Service Web site.

China, the world's fastest growing major economy, is the largest producer of corn after the U.S., and the world's biggest producer of pork and second-largest producer of poultry. Still, as demand for meat among its 1.3 billion people rises, farmers' need for corn for use as animal feed is climbing.

China's coarse-grain imports will more than triple from 2 million tons in the year ended September 2005 to 6.2 million tons in the year ending September 2016, Jarrell said. The increase would happen even as the U.S. uses more of its own corn production for ethanol, reducing its stocks to 1.12 million tons from 2.1 million tons in the same period, he said.

Corn prices will average $2 a bushel in the year ending September 2006, up 10 percent over the previous year, Jarrell said, citing the U.S. Department of Agriculture's long-term baseline projections. By the year ending September 2016, they would rise to S$2.60 a bushel.

Corn traded on the Chicago Board of Trade has gained 23 percent to $2.50 a bushel in the past six months.

Meat Production

Corn futures could rise above $2.90 a bushel in three months as higher world demand reduced U.S. corn inventory by 11 percent this year, Citigroup analyst Terry Reilly said in a March 31 report. U.S. corn production may fall 4.6 percent from last year's bumper crop to 10.6 billion bushels in 2006, he said.

Chinese meat production rose 5.7 percent to 76.5 million tons last year, Wang Xiao Hui, a senior analyst with the National Grain & Oil Information Center, said in an interview April 18. The center is linked to the State Grain Administration of China.

Demand for pork will rise 11 percent in the five years to 2010 to 41.3 kilograms a head, and demand for beef will surge 91 percent to 41.5 kilograms a head, he said.

In 2004, grains represented 68 percent of food crops in China, down from 79 percent in 1990, as production of fruit, vegetable and oil crops rose, Noureddin H. Mona, the representative for the Food & Agriculture Organization in Beijing said in an interview.

Food Security

Chinese domestic grain needs will probably rise by at least 2 million tons a year, pushing total demand to 550 million tons by 2010, Mona said, and ``it might be difficult for China's total grain output to surpass 520 million tons by 2010.''

China's acreage for growing corn will likely remain little changed, with 25.7 percent of arable land set aside for corn by 2010, from 25.1 percent in 2005, said Wang.

Domestic production would be key to China's food security, Mona said. ``A drop of 1 percent of China's grain output means extra imports of nearly 5 million tons or 2.5 percent of the world's total grain trade volume.''

To contact the reporter on this story: Claire Leow in Beijing at cleow@bloomberg.net.

Last Updated: April 20, 2006 02:53 EDT