On May 2, 2013, Xinhua News Agency reported that the Brazilian Agriculture Minister will visit Asian countries in the second week of May and he will seek to reach an agreement on exporting corn to China. If this comes true, it's estimated that Brazil may become another main import origin of corn for China, according to Corn Products China News, issued by CCM in May.
In fact, China mainly imports corn from the US currently—the corn imported from the US accounts for more than 95% of China's total import volume of the product. According to China Customs, China's import volume of corn from the US has witnessed a sharp increase in the recent three years. In 2012, the domestic total import volume of corn from the US was almost three times as that in the previous year, reaching 5.1 million tonnes. Although CCM estimated that the import volume of corn from the US will not increase in 2013 over 2012, it's believed that the amount of import volume from the origin will still be large.
Meanwhile, China also imports corn from other origins such as Peru and Laos. But the import volume from these regions is much less, which means that China actually imports corn from a single origin, indicating a huge potential risk, especially when the corn output in the US largely decreases or the US government legislates some unfavorable policies in relation to its export of corn to China.
For example, the US suffered from a serious drought in 2012, leading to a possible production decrease of corn in the season of 2012/2013. According to the US Department of Agriculture (USDA), the total production of corn in the US is estimated to decrease to 274 million tonnes in 2012/2013 from 314 million tonnes in 2011/2012. Although the actual data may be higher than the estimation, it will affect the US' export volume of corn to China this year.
Furthermore, a large portion of corn in the US has been used to produce fuel ethanol in recent years, which has reduced its export volume of corn to China to a certain extent.
Brazil has been the third largest producer of corn in the world, just after the US and China. According to the USDA, Brazil will break a record in the production volume of corn in the season of 2012/2013 with about 74 million tonnes. The supply of corn in Brazil has actually seen a little surplus. As one of the major exporters of corn in the world, Brazil recorded a historic high export volume of corn in 2012, around 16 million tonnes, as reported. Meanwhile, as the largest consumer of corn in the world, China needs to import a large quantity of corn in order to meet the increasing demand from the domestic market.
In fact, South American countries have great potential to export corn. According to the relevant data, the production volume of corn in South America reaches more than 100 million tonnes per year, which accounts for 13% of the total in the world. In late 2012, China imported 48 tonnes of corn from Argentina (please refer to China imports corn from Argentina for the first time in Corn Products China News 1301 for more details). Though the import volume is small, it signifies that China may import more corn from Argentina and other South American origins (including Brazil) other than the US.
If China can permit the import of corn from Brazil, it's believed that it will lower China's risk of importing a large volume of corn from only one origin.
Table of Contents of Corn Products China News 1305:
Development pace of starch sugar may slow down in 2013
Furfural market downturn in the first five months of 2013
Chinese corn products Imp. & Exp. analysis in March 2013
Chinese VC Imp. & Exp. up in volume but down in value in Q1 2013
Price update of corn products in China, May 2013
Domestic market price of corn oil drops in early 2013
Second fermentation plant of Lotus Flower Gourmet Powder shut down temporarily
North China Pharmaceutical sees sharp decrease in net profit in 2012
Meihua Group ups in revenue but downs in net profit in 2012
Baolingbao’s 2012 net profit grows by 20.83% YoY 23
China to raise minimum purchase price of corn in 2013
MOF issues new subsidy policy for poultry industry
Brazil seeks to export corn to China
Corn Products China News, a monthly publication issued by CCM on 20th, features “Supply and Demand”, “Import and Export Analysis”, “Price Update”, “Market & Company Dynamics”, “Policy”, “Corn Supply” and other more information researched and reported by CCM’s professional journalists. It is a reliable intermediate for you to know more about the corn industry in China and in the world.
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