China's corn import restrictions may only be the beginning

After restricting US corn imports, Chinese government officials may turn their attention to corn supplies from other regions, and may also restrict the growing imports of sorghum.

The US agricultural attaché has lowered its forecast for China's corn imports in 2014/15 to a four-year low of 2.5 million tons, down 500,000 tons from the previous forecast, because China has returned large shipments of US corn since last November on the grounds that genetically modified components not approved by China's Ministry of Agriculture were found in these US corn cargoes.

The attaché noted that although imported corn at Guangdong ports is about 1,000 yuan/ton cheaper than domestic corn, biotechnology-related trade restrictions continue to constrain US corn exports to China. In fact, the attaché warned that China's corn import restrictions could expand from the United States to other countries. China's slow progress in approving genetically modified crops constrains the volume of imports from the United States and could also affect Brazil and Argentina.

The attaché is concerned that Chinese government officials may turn their attention to alternative feed grains, such as Australian feed barley, US sorghum and Thai cassava, all of which can replace imported corn.

China's sorghum imports in 2012/13 were 631,000 tons, while in the previous year they surged to 4.16 million tons, and imports this year could reach 4.3 million tons.

The attaché warned that the rapid growth in sorghum imports has already drawn the government's attention. Quality inspection officials have been strengthening quality inspection of imported sorghum cargoes. According to Chinese importers and feed processors, some major suppliers are currently unwilling to sell to China because they fear possible trade disruptions.

The attaché estimates that China's ending corn stocks this year will reach a record 79.7 million tons, 2 million tons higher than the official USDA forecast, because of a bumper corn harvest in 2014. Although ending corn stocks this year will still be 4.5 million tons lower than the previous year, the quality is higher, meaning the amount of usable corn may be comparable.

In fact, the Chinese government may continue to control corn imports in order to reduce its huge stocks. At the same time, the government is unlikely to allow corn prices to fall sharply, which means China's import demand for alternative feed grains will remain strong.