What is in this article?:
- China a power player in global corn market
- Corn imports
- According to estimates by the Foreign Agricultural Service (FAS) of USDA, China is the world’s second largest producer and consumer of corn in 2011/12, with production of 191.8 MMT and consumption of 188.0 MMT.
Those increases in imports, if spread out over a few years, can be met with minimal impacts on markets. Purchases of 15 MMT per year would be about the same as the current largest importer, Japan, which has averaged 16 MMT per year recently. Mexico has averaged over 9 MMT and South Korea over 8 MMT. Egypt and the EU-27 each import about 5 MMT per year with Taiwan over 4 MMT. Global trade in corn is estimated at 96 MMT for 2011/12 and 15 MMT would be 15.6 percent of current global trade. A return to trend yields in U.S. would add about 30 MMT to the corn supply for the 2012/13 year. Exports have been trending up in Brazil and Ukraine. In the short run, supplies may be tighter because only the U.S., Peru and Thailand are approved to ship corn to China, but that is expected to change.
Increasing corn imports for China may be tempered by other factors. The trend to more wheat feeding could continue as world wheat stocks remain ample and prices near corn. China could decide to import more pork, beef and poultry rather than importing additional feed. The government could continue to restrain the growth in corn processing and related industries. Corn yields per hectare are a little over half U.S. yields and further improvements in hybrids, the adoption of biotechnology and new farming practices could increase yields and total production.
The most important factor for integrating China’s corn import needs into the global market is more market information, particularly about the level of corn stocks in China at the end of the year and by quarter. This would give market participants some idea of the size of the corn crop, the rate of consumption and the potential for imports. As a G20 country, China has committed to increasing transparency in agricultural markets by increasing the quantity and quality of information available, especially stock levels and harvest forecasts, covering wheat, corn, rice and soybeans. If market signals can be correctly communicated, farmers around the world can produce the needed corn import requirements.
Ross Korves is an Economic Policy Analyst with Truth About Trade & Technology.