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China is becoming a net corn importer as a result of robust domestic demand from the corn deep processing sector.

 

The nation's corn exports stood at 2.27 million tons in the first three quarters of this year, down 68.3 percent year-on-year, while imports hit 60,000 tons, up 43 times year-on-year, according to statistics from the Ministry of Commerce.

 

Boosted by rising oil prices, many grain enterprises have built processing facilities in China's major corn producing provinces. The growing capability will drive domestic demand even higher and is likely to turn China into a net corn importer in the coming years, insiders said.

 

"Corn stocks have fallen this year as a result of domestic demand," said an official from the Ministry of Commerce, who wished to remain anonymous. "We believe that China will become a net importer of corn in a few years."

 

He contributed the change largely to increasing industrial processing, but he did not expect the change to happen in 2007 because China's corn supply still exceeds demand.

 

Corn is largely used in producing fuel ethanol, sugar and animal feed.

 

There are over 10 corn deep processing plants in Northeast China's Jilin Province, with a total annual processing capacity of 6 million tons, said Jiang Jianhua, deputy general manager of Jilin-based Jiliang Group.

 

It is estimated that by 2008, facilities in Northeast China, the country's major corn-producing region, will annually consume around 15 million tons of corn.

 

Over 25 million tons of corn was used in deep processing in 2005 in China, compared with 13.8 million tons in 2004. The figure jumped to 15.6 million tons in the first half of this year.

 

China is now the third-largest fuel ethanol producer after Brazil and the United States. Production of fuel ethanol and corn alcohol consumed 8.9 million tons of corn in China last year, accounting for 44.5 percent of industrial consumption of corn.

 

Demand from ethanol makers, sugar producers and feed factories, has exhausted some of the nation's corn stocks. An ethanol producer claimed its employees had to go to over 100 grain depots in Northeast China for their supplies this year.

 

Jiang said China's exports of corn are unlikely to reach 5 million tons in the second half of this year as previously estimated. The nation exported about 8.61 million tons of corn last year.

 

Meanwhile, more enterprises have begun to import corn. In July, a sugar maker ordered 50,000 tons of corn from the United States. Experts also suggested the Chinese Government strengthen its administration of corn processing plants in a bid to avoid major fluctuations in demand and prices.

 

(China Daily November 24, 2006)