The Chinese government is all set to import millions of tonnes of corn over the next year. China to increase corn imports amid a surge in animal feed demand and tightened domestic supplies.
China to Increase Corn Import
Three industry sources, two from China and one from Singapore, confirmed that China is about to become the world’s top importer of corn. The government is planning to release more lower-tariff quotas for buyers to ease the domestic shortage. This will subsequently add to the food inflation caused by disruptions to global supply chains due to the coronavirus pandemic. The country held reserves for a long time but had to sell them at auction due to an increase in demand. A typhoon, drought has hit its domestic output, and a pest hit crops.
Terry Reilly, senior analyst, Chicago brokerage Futures International has mentioned the prospects of China becoming the major import player and changing the scenario of the entire world corn balance sheet. In the 1990s, the nation had to import large quantities of soy, another primary animal feed, which led Argentina, Brazil, and the United States to switch to the demanded crop.
Issued 5 Million Tonnes Special Low-Tariff Quota for Corn Imports to COFCO
China met most of its demand for 280 million tonnes of corn through domestic crops. It issues 7.2 million tonnes in low-tariff quotas for corn imports annually. However, it would require four times that quota in 2020-2021 October to September crop year. Also, the USDA attaché in Beijing reported a month ago that there were discussions about state-owned companies recommending National Development and Reform Commission (NDRC) to allocate an additional 20 million tonnes in lower-tariff quotas. That apart, China’s importers have already ordered more than double the annual allowance from the US, Ukraine, and other countries. The East Asian nation has already issued a 5 million tonnes low-tariff quota to top grains trader COFCO.
The United States has shipped around 3.7 million tonnes of corn to China.
In all, China has increased agricultural imports significantly this year due to a domestic shortage. Also, it needs to fulfil the commitment under the trade deal signed with the United States.