China’s Corn Imports Seen Doubling as Crop Shrinks and Demand Rises

(Bloomberg) — China’s corn imports could more than double to 17 million tons in 2020-21 from a year earlier on prospects for a smaller domestic harvest and a recovery in demand for hog feed, according to the head of the logistics information department at COFCO Trading Co.

The increase in imports would also meet commitments under the U.S. trade deal, Wang Baichao said Tuesday during an online seminar. Imports were 7.6 million tons in 2019-20, he said. China has already booked more than 10 million tons of U.S. corn for 2020-21, including 8.8 million tons that have not been shipped, according to the U.S. Department of Agriculture.

Because of a near-record price gap between domestic and Chicago corn prices, imports of sorghum and barley, which are used to replace corn and are not subject to quotas, are also likely to expand more than expected, Wang said. Overseas purchases of sorghum totaled 3.7 million tons in 2019-20, while barley imports were almost 6 million tons.

Large imports by animal feed mills in the south may encourage them to turn to imported prices as a benchmark rather than the local market. The price spike this month comes as companies build inventories, Wang said. Some now have stockpiles equal to one and a half month’s consumption, he said. Output may drop 7 million tons from last year, with quality also hit by bad weather, he said.

A corn deficit of about 60 million tons is expected for 2020-21, which would be partly covered by extensive use of low-quality wheat, Wang said, estimating that usage at 20 million tons.

Sales are slow this year as more traders are hoarding the grain to bet on even higher prices, Li Xingbiao, an analyst with Citic Futures Co., said in the same seminar. Li also expects the domestic harvest to drop by 7 million to 8 million tons after recent crop tours of the typhoon-hit provinces of Heilongjiang and Jilin.

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