July 26 (Bloomberg) -- China may import as much as 15 million tons of corn in 2015 as demand outstrips local supply and the country enters a “new era” of buying from overseas, the U.S. Grains Council said, citing Shanghai JC Intelligence Co.
Imports may total 1.7 million tons this year and 5.8 million tons next year, the council said, citing Shanghai JC Chairman Hanver Li. Even with normal weather, the second-largest corn consumer won’t be able produce enough to meet demand as incomes rise, the council said on its website, citing Li.
China’s reemergence as a net corn buyer may help to drive global prices higher. Imports of 5.8 million tons would surpass China’s previous record purchases in the 1990s, according to U.S. Department of Agriculture data. Corn is used to make animal feed, with demand rising as consumers buy more meat and dairy products.
“The natural market to supply China in the corn space is certainly the U.S.,” Luke Mathews, a commodity strategist at Commonwealth Bank of Australia said, referring to the top producer and exporter. “China buying is certainly something that’s going to be supportive for global grain prices.”
Corn has risen 8.5 percent since April 27, a day before the USDA reported the first corn sales to China by U.S. exporters of at least 100,000 tons since 2001. The December contract on the Chicago Board of Trade narrowed losses today, trading 0.2 percent lower at $3.8375 a bushel at 1:15 p.m. in Beijing. ‘New Era’ “Demand for corn in China is simply outstripping the country’s production trend,” the council’s statement said, citing Li, who spoke through an interpreter. “A new era of China importing corn is here,” Li was cited as saying. A phone call by Bloomberg News to the head office of Shanghai JC Intelligence today was not answered.
The Asian nation had been a net exporter of the grain in recent years, including last year, when it sold 172,000 tons, compared with purchases of 47,000 tons, according to USDA data. China’s corn harvest totaled 164 million tons last year, down 1.2 percent, the statistics bureau said in May.
China’s previous record imports totaled 4.29 million tons in the year to September 1995, according to data from the USDA. Imports of 5.8 million tons may make the nation the fourth- largest buyer, overtaking Egypt, according to the department.
Corn imports by China, the world’s most populous nation, may surge to 10 million tons in 2015, according to a forecast earlier this month from Akio Shibata, chief representative for trading company Marubeni Corp.’s research institute. The company is Japan’s biggest grain trader.
Meat and Eggs
China’s expanding economy is boosting demand for meat, milk and eggs because as incomes rise people buy more food, Li said, according to the council’s Global Update report, dated July 22. Li was speaking at the group’s 50th annual board of delegates meeting. The council develops export markets for U.S. harvests.
The country had reached a “turning point,” Shanghai JC’s Li was cited as saying, referring to the period when China becomes a regular importer. Bad weather this year had cut output, local prices were rising and stockpiles were dropping, Li said.
The rising demand for food in China offered “an excellent opportunity” for increased corn shipments, Thomas Dorr, the grain council’s president, said last month. China may buy as much as 1 million tons over the next 18 months, Dorr forecast.
China has been selling corn from state stockpiles this year to cool local prices for immediate delivery that have risen 8.8 percent, according to data from Shanghai JC. At the same time, the nation has stepped up overseas purchases amid concern that the year’s crop may drop after bad weather.
“For now, imported corn will be limited, and will have limited impact on China’s domestic market,” said Yu Xiaomeng, an analyst at research company Beijing Shennong Net. Domestic crops looked fine, even with some weather concerns, she said.