Dec. 16 (Bloomberg) -- China may boost corn imports to a record next year as the U.S., the world’s biggest grain exporter, potentially faces increased competition from rival supplier Argentina, the U.S. Grains Council said.
Corn purchases may grow fivefold from 1.5 million metric tons this year “to upward of” 7.4 million tons in the 2011 calendar year, Thomas Dorr, president of the industry group, said in an interview in Beijing. The group in July forecast imports of 5.8 million tons.
The world’s biggest grain user may overtake Japan as the largest corn importer within five years, buying as much as 25 million tons by 2015, driving prices higher as rising incomes fuel demand for pork and chicken, Rabobank Groep NV said last week. Chinese officials are “aggressively” trying to add Argentina to their alternative suppliers as domestic reserves dwindle, boosting competition for U.S. exporters, Dorr said.
China “sends the appropriate market signal to the world that there is new demand for corn,” Dorr said yesterday. “Whether the Chinese ultimately take 5 or 7 million or 10 million tons of corn, whether they take from us or they take it from Argentina, we don’t know,” he said.
Corn has jumped 42 percent this year, climbing to a 27-month high of $6.175 a bushel on Nov. 9 after the U.S. government forecast smaller-than-expected supply. The contract for March delivery traded at $5.8650 a bushel in Chicago today.
On China’s Dalian Commodity Exchange, corn gained 24 percent this year on tightening supplies. The September-delivery contract ended at 2,323 yuan ($349) a ton.
China’s corn output may be 172.5 million tons this year, a 5.2 percent gain from 2009, the China National Grain & Oils Information Center said today, raising its forecast by 3.5 million tons from a month ago.
The Asian nation had been a net exporter of the grain in recent years, including last year, when shipments outpaced imports by 125,000 tons, according to the U.S. Department of Agriculture.
“A new era of China importing corn is here,” Hanver Li, chairman of Shanghai JC Intelligence Co., said in July, according to a U.S. Grains Council statement.
China is more likely to use imported corn in the marketing year that began Oct. 1 because the government hasn’t bought a temporary reserve to cover possible shortages, state-affiliated researcher Cngrain.com said in a report posted on its website on Dec. 13. The government doesn’t disclose state reserve levels.
The government may not let corn imports gain “in the scope that has emerged in the soybean industry,” Dorr said. China’s soybean imports surged fivefold in the 10 years ended Oct. 31, and it now imports about 80 percent of its consumption, according to USDA data.
Imports of 7.4 million tons, or about 291 million bushels, of corn would represent an increase of almost 15 percent in demand for U.S. corn exports if China bought entire amount from the U.S., Dorr said. Under the terms of its World Trade Organization membership, China agreed it would allow imports of as much as 7.4 million tons of corn at the lowest tariff rate.
China is working to begin imports from Argentina, Dorr said, citing discussions with Chinese officials, who have “made very clear” they are trying to complete a so-called Pest Risk Assessment that will enable the country to commence buying from the world’s second-biggest exporter.
Argentina expects to reach an agreement on corn sales to China in the first half of 2011, Minister of Agriculture Julian Dominguez said Dec. 1.
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