JCI: China’s Corn Imports are Beginning of ‘New Era’
The chairman and chief consultant of Shanghai JC Intelligence Co. Ltd. (JCI) said his organization anticipates that China will import some 1.7 million tons of corn this year, 5.8 million tons next year and as much as 15 million tons in 2014-2015.
Speaking through a translator, JCI’s Hanver Li told those at the U.S. Grains Council’s 50th Annual Board of Delegates Meeting that demand for corn in China is simply outstripping the country’s production trend. China’s economy continues to grow, he explained, which is driving an increase in demand for meat, milk and eggs because as incomes rise, food is one of the first items people look to buy.
In fact, JCI estimates that meat consumption per capita will grow from 59 kg in 2005 to 61.7 kg this year to 63.1 kg in 2015. Milk consumption will grow from 22.0 in 2005 to 30.1 and 33.4 in that same time frame, while aquatic products will grow from 39.2 to 44.1 and 48.9. Li said rural areas will drive meat demand, while urban centers will drive milk and aquatic products demand.
In looking at the economy, Li said China’s gross domestic product (GDP) growth rate now stands at 11 percent, although some individual provinces are seeing growth rates of 15-16 percent, as estimated by JCI. The country’s consumer price index is within a normal range, the amount of currency held by the public is strong and incomes in both urban and rural areas are rising. “There is a great future for the growth of agricultural products in China,” he said.
To answer the question about why China imported U.S. corn this year, Li explained there is simply a short supply in China right now due to production shortfalls driven by poor weather but demand has remained strong. He said prices have moved up and the amount of corn in storage has fallen – and JCI believes there is less corn on hand than the government’s official estimates.
This also explains why China’s imports of U.S. distiller’s dried grains with solubles (DDGS) have grown so quickly, he said. China is on pace to become the largest buyer of U.S. DDGS this year, buying some 1.5 million tons. JCI estimates imports of 1.5 million to 1.8 million tons.
Li said imports of U.S. corn and higher local prices for corn and wheat indicates that “we have gotten to the turning point” – the point where China will become a regular importer of corn.
In addition to economic growth, the population continues to expand, Li said, and even with normal weather, China’s ability to produce corn can’t keep up with that growth. “That’s why we’ve come to the conclusion that a new era of China importing corn is here,” he said.
Li did note that China will work to better control corn production. “Policy changes can only improve the production of corn,” he said, “and if the government invests a lot to improve the land” it could override shortfalls created by poor weather. He added, however, that this will take some time and that by then “my hair will all turn gray.”
