China has already become the most important buyer of soybean in the global market, and it is also becoming the most important buyer of grain (excluding soybean, the same hereinafter). In H1 2012, China imported 7.34 million tonnes of grain in total, up 283.7% year on year, with import value of USD2.51 billion, up 233.0% year on year. The import of grain in H1 2012 has exceeded the total import in 2011. It is expected that the total grain import this year may exceed the high level in 2004, according to CCM’s September issue of AgriChina Investor.
The import of major grains, namely wheat, corn, rice and barley, all witnessed a remarkable increase in H1 2012. In detail, during this period, the import volume of wheat was 2.19 million tonnes, up 294.9% year on year; China imported 2.40 million tonnes of corn but just imported 36,000 tonnes during the same period of last year; the import volume of rice was 1.18 million tonnes, up 226.9% year on year, and that of barley was 1.50 million tonnes, up 62.3% year on year.
The huge increase in grain import surprised many people because China's grain production hit a record high in 2011, and rice, corn and wheat all witnessed yield increase. However, China's consumption of grain has also increased at the same time and its pace is faster than the growth of grain production.
Besides the strong demand in the domestic market, there are also some other factors boosting the grain import in H1 2012. Firstly, the price of grain in the world market was much lower than domestic price in this period, so domestic companies increased the import for fatter profit, even though there was an ample supply of grain in domestic market. For example, the average price of imported rice in H1 2012 was USD480/t, much lower than the domestic price of USD680/t (Indica rice).
Secondly, alongside the economic factor, the grain import was also driven by political considerations. Chinese leaders visited the US in the first half of this year and signed many agricultural cooperation agreements. The large order has been beneficial for the balance of China's foreign currency. In H1 2012, China's trade deficit from agricultural produces was USD24.83 billion, up 78.2% year on year.
China's grain import may slow down in the second half of this year. The price of grain in the world has increased a lot recently caused by the heavy drought in the US, so Chinese companies will be less willing to import grain. Besides, the second half of the year is the harvest season for autumn grain in China and a good harvest for grain crops is expected.
However, China's import of grain this year will still have a chance to exceed the import in 2004. The grain import in H1 2012 accounts for 75% of the total grain import in 2004. A succession of bad harvests from 2000 to 2004 led to a short supply of grain in domestic market. Thus, in 2004, China imported lots of grain for stock replenishment. After 2004, China paid great attention to increase domestic grain production and the grain import witnessed decline in the following years.
After 2007, China's grain import started to increase again, although domestic grain yield increased every year. It is estimated that this increase is an inevitable trend due to the strong demand in domestic market.
Source: AgriChina Investor
http://www.cnchemicals.com/Newsletter/NewsletterDetail_192.html
Content of AgriChina Investor 1208:
Tiantang Guigu invests in pig breeding industry
Sunner Development to triple broiler chicken capacity in future 5 years
Three pesticide companies proceeding with IPO
Zhejiang's private capital rushes into agricultural industry
NDRC's new policy may hard to control edible oil price
China to revise Rural Land Contract Law
China releases 12th Five-Year National Program for Rural Economic Development
China's grain import this year may exceed the high level in 2004
Armyworm's impact on corn production to be limited
Rising soybean price lifts breeding cost
Low gain in agricultural production causes land abandonment
Agricultural insurance needs further promotion in China
Income gap among rural households reportedly extends
China's soybean import hits a new high in first seven months of 2012
Unused import quota of agricultural produces to be redistributed
Qingdao bonded area witnesses cotton overstock
China's pesticide technical output increases by 21.70% in H1 2012
MOA warns blind capacity expansion of ordinary wheat flour processing
World Bank grants loan for Guangdong's agricultural pollution control
Guangdong Tiandi Food to explore market outside Guangdong
……
AgriChina Investor, periodically published on 31th every month, offers timely update and close follow up of agriculture investment in China, analyzing market data and trends, as well as related policies. Major columns include investment environment, investment dynamics, market watcher, market review etc.
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