FAO raises corn stocks in China by 15%

The Food and Agriculture Organization of the United Nations recently "sharply raised" the valuation of China's corn stocks, further confirming fears that China's corn demand could be severely exaggerated.

According to the Financial Times website on April 5, the FAO estimated global corn stocks in a recent briefing on world agricultural supply and demand, which historically raised China's corn stocks. Corn is the main source of feed for livestock and poultry.

It raised its valuation of Chinese corn stocks for the 2014-2015 farming year by 15 per cent to 95.4 million tonnes. In January, the USDA slashed its medium-term forecast for China's corn import demand.

The FAO's new estimate for China's corn stocks is another blow to big grain exporters such as the US and some big agricultural traders, who have been preparing for China to increase its corn imports.

China is already the world's largest importer of soybeans. Some agribusinesses and corn growers had expected demand for meat to grow as national income levels rose. As a result, China's corn imports will also increase in the next few years.

In 2014, the USDA predicted that China would become the world's largest importer of grain. But there is growing evidence that China's grain stocks are rising and demand is falling. This caused the market to rethink.

Last year's long-term forecast for China's grain imports from 2023 to 2024 was 22 million tons, and the FAO has lowered it to 6.5 million tons.

The FAO says it has lowered its estimate of China's corn consumption in 2004-2009. This means that the extra supply is turned into inventory.

As a result, the group has raised its corn stocks in China over the past decade, with estimates of China's corn stocks rising from 82.7 million tons to 95.4 million tons in 2014-2015. The figure is higher than the estimates of the USDA and the International Grain Council, which are valued at 79.2 million tons and 85.7 million tons, respectively.

Abdul-Reza Abasian, senior economist at the FAO, said the concern is that such valuations may still underestimate China's corn stocks. "some Chinese exporters tell us that the figure of 95.4 million tons is still too low."

China's grain production has had bumper harvests in 2012 and 2013, while grain consumption has declined in the past few years, the report said. Therefore, it is high time for the FAO to increase China's corn stocks.

[extended Reading] China imports large quantities of Ukrainian corn. British media: American corn is left out in the cold.

China, the world's second-largest corn consumer, ordered more than 600000 tons of corn from Ukraine in 2015, foreign media reported on March 18. As China's reserves lead to tight supply and rising prices in the domestic market, China is likely to do more deals.

China's import of corn from the Black Sea nation of Ukraine under the terms of the China-Ukraine grain loan agreement is seen as a blow to US corn exporters, Reuters reported on March 17. U. S. corn production has reached a new high, and exporters are trying to sell.

Under pressure from China to buy Ukrainian corn, US corn futures closed down for the fourth day in a row on March 17, with prices falling to their lowest level in six weeks.

According to the report, one buyer said that some Ukrainian corn planned to ship from April to May 2015 cost 1500 yuan ($240) a ton, including the price and freight. The price is 60% lower than domestic corn prices, with a price tag of 2490 yuan per ton at Shenzhen's main port.

The US corn price per ton is 80 yuan ($13) lower than the Ukrainian corn price, traders said. The buyer said that at the end of this month or next, some factories hope to obtain import quotas.

Traders also say Beijing's reserves have led to a tightening of domestic supply, with domestic corn prices rising 100 yuan ($16) a tonne in the past two weeks.

It is reported that Ukraine shipped about 1 million tons of corn to China in 2014 under the terms of the grain loan agreement between the two sides. In March, Ukraine said it hoped to double its corn shipments to China by 2015.

In January 2015, Ukraine shipped 470047 tons of corn to China, more than the United States, according to official import figures.

Reported that between 2009 and 2010, China began to import corn on a large scale, most of it from the United States, but since 2014, China has switched to importing corn from suppliers in the Black Sea region.

Traders believe that US corn has become less popular among Chinese buyers after US suppliers began to require buyers to bear the potential risk of importing GM corn.

When asked why Chinese buyers did not order cheaper US corn, a manager at a state-owned stock exchange said: "the supplier has changed the terms of the contract, which is why."

Another trader said that after more US grain depots accepted Syngenta's Agrisure Duracade genetically modified corn, feed processors were worried that Beijing might once again reject goods from the United States. Because China has not issued a safety permit for this kind of corn.

Agrisure Viptera, or MIR 162genetically modified corn, has triggered a series of lawsuits related to US grain exports, the report said. In 2014, Beijing's refusal to import the genetically modified corn led to US agricultural losses of $2.9 billion.

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Farmers in Shandong Province, China are loading corn kernels (photo: Reuters)

(2015-03-18 00:33:00)

[extended Reading] USDA slashed its forecast for China's corn imports

Earlier this month, risk forecasts for China's agricultural market were tested when the U.S. Department of Agriculture (USDA) slashed its forecast for China's corn imports.

Last year, the USDA estimated that China would become the world's largest importer of corn. But there is growing evidence that rising inventories and falling demand in China have prompted the USDA to change its mind and slash its forecasts. Last year, the USDA's long-term forecast for China's corn imports in 2023 Compact 24 was 22 million tonnes, which has now been lowered to a mere 6.5 million tonnes.

"the overall situation has really changed in the past 18 months or so," said Fred Gale, senior economist at the USDA's Bureau of Economic Research.

Rising demand for overseas corn, particularly in the US, in 2011 and 2012 has led analysts at home and abroad to predict that China will become a net importer of corn. Corn is mainly used as livestock and poultry feed as well as processed food.

So what happened?

After record production in 2012 and 2013, consumption suddenly fell and China found a large stock of corn in the country.

"it may take years for China to digest such a large excess inventory," the USDA said in its latest report on Chinese agricultural imports. "

Apart from favourable climatic conditions, the rise in corn stocks in China is as familiar to traders as sugar and cotton. China's agricultural subsidy policy means that Chinese corn prices are higher than international prices. This has not only encouraged domestic production, but also prompted China to buy cheap imported corn at a time when global food prices are falling.

Corn stocks increased during the 2013 crop year as the Chinese government bought domestic corn to support the corn market. Official corn stocks rose to 100m tonnes, accounting for about half of China's annual consumption.

Another factor, says Mr Gale, is a surge in imports of Chinese sorghum and barley, both corn substitutes. According to the USDA, imports of sorghum and barley (unlike other grains, with no import quotas) soared to 11.5 million tons in the 2014 crop year from 1.7 million tons in 2010.

Although the Chinese government auctioned 63 million tons of corn to reduce stocks, the turnover was only 25 million tons, according to the USDA. Even so, the Chinese government has announced that it will buy corn harvested in 2014 to support prices. Corn stocks are at a 14-year high.

Although China will eventually turn to corn imports, it is likely to try to minimise imports. Chinese government officials see agricultural imports as inevitable, but do not seem to trust international markets, according to the USDA.

"imports and foreign companies are clearly dominant in China's soybean industry, which strongly affects food safety strategies, which are seen as potential threats to China's soybean supply," the report said. "

This attitude helps explain China's actions in food trade over the past few years. To give Chinese importers more price bargaining power while reducing the risk of a possible trade embargo, China has diversified its sources of food imports. In 2012, for example, the Chinese government opened its market to corn from Argentina and Ukraine as imports of corn from the United States increased.

Second, China expects to gain more control over its agricultural import supply chain through overseas investment. The move by state-owned COFCO to form an agricultural joint venture with Noble Group and to buy a controlling stake in Nidera, the Dutch agricultural trading group, appears to follow that strategy.

Expanding overseas investment will allow Chinese companies to make more profits, secure reliable supply for the domestic market and exert greater influence on international prices, the report said.

(source: FT Chinese website translator / Liang Yanchang)

(2015-03-01 10:03:00)

U.S. Secretary of Agriculture: China approves the import of Syngenta genetically modified corn

Sina Financial News on the 18th, according to the Wall Street Journal, U.S. Secretary of Agriculture Vilsack said that China's Ministry of Agriculture has approved the import of a controversial genetically modified corn, Syngenta's Agrisure Viptera, a year after China returned corn that was said to contain unapproved ingredients.

Vilsack said Chinese Vice Premier Wang Yang told him at a meeting of Chinese and American officials in Chicago that the corn and two kinds of genetically modified soybeans had been allowed to be imported.

Vilsack also said he and Wang Yang also agreed on the need for a high-level strategic dialogue to discuss general innovation in agriculture.

Syngenta submitted the corn to Chinese regulators for review in 2010.

Key words of the article: corn transgenic Syngenta

(2014-12-18 10:48:12)