The gap between domestic and foreign corn prices may widen or accelerate imports.

Analysts say that as international corn prices have fallen sharply, the gap between China's domestic corn prices and the international market has widened further, making full tariff imports more economical and feasible, and Chinese corn imports are expected to grow.

China is the second largest consumer of corn in the world. The improved outlook for China's corn imports may provide positive support for international corn prices. International corn prices are still hovering around a five-year low. However, analysts point out that initial imports by Chinese buyers may be limited because of concerns that the government may take measures to restrict imports.

The fact that China's domestic corn prices are higher than those in the international market is related to the fact that the government has implemented collection and storage programs to increase farmers' income; in addition, the Chinese government has used a quota system to control the scale of bulk grain imports, including corn. According to a notice issued by the NDRC at the end of 2014, the corn tariff rate quota (TRQ) in 2015 was 7.2 million tonnes, and the corn import tariff within the quota was 1 per cent, much lower than the 6 per cent tariff outside the quota. 60 per cent of TRQ is allocated to state-owned companies and 40 per cent to non-state-owned enterprises.

So far this year, global corn prices have fallen 9 per cent as US corn production hit an all-time high and some worrying factors on the demand side. By contrast, Chinese corn prices are still high and the gap between Chinese corn prices and the international market is further widening, so even matching additional imports now seems economical and feasible. Imports outside the quota are subject to 65% full tariff.

Jin Weidong, chairman of Liaoning Hefeng Animal Husbandry Company, said that if [the price of imported corn] is cheaper, we will certainly consider [import]. The price difference between domestic corn and imported corn is 100 yuan per ton (US $16). This price difference is very significant. Last week, the price of US No. 2 corn in Guangdong port was about 1493 yuan per ton, nearly 1000 yuan cheaper than domestic corn. Even with a 65% off-quota tariff, imported corn is about 90 yuan cheaper per ton than domestic corn, and international corn prices are still falling.