What is the impact of restoring the export tax rebate policy on the corn market?

On August 22, the Ministry of Finance issued an announcement that, with the approval of the State Council, the VAT export rebate rate for corn starch, alcohol and other deeply processed corn products will be restored to 13% from September 1, 2016. the resumption of export tax rebate is conducive to reducing export costs and digesting domestic excess capacity.

In 2009, such a policy was implemented in China to stimulate and estimate the export of corn deeply processed products, but the export tax rebate was 5% at that time and was cancelled in July 2010. the export tax rebate was raised to 13% in 2015, and the export tax rebate was implemented during 2015 and was cancelled in January 2016.

China's corn starch import has declined gradually since 2015. China's starch export volume was only 74000 tons in 2015 and 56000 tons in 2014, falling from more than 400,000 tons in 2008 to less than 100000 tons at present. According to data, China's annual starch consumption exceeded 19 million tons in 2008, of which exports accounted for less than 0.4%. Tax rebate is only part of the cost, but also need to pay attention to the overall cost of raw materials and the price of finished products. Otherwise, even if there is an export tax rebate, the cost of corn is high, such as a small increase in corn starch exports in 2015.

At present, the short-term impact of the resumption of export tax rebate for processed products may not be obvious. On the one hand, the domestic corn price is higher than the international corn price, and the product export is still less competitive than that of the United States and other traditional exporting countries; on the other hand, there are not many domestic corn starch enterprises with export qualification. Thailand's export volume of cassava starch continues to increase, forming resistance to the export of China's deeply processed products.