Corn stocks are so high, so why are we still importing?

China's corn supply is basically self-sufficient, and every year corn imports are basically subject to a quota limit of 7.2 million tons, which is nothing at all compared with China's corn output of 200 million tons.

However, since last year, imported corn has been joined by quite a few "allies," as so-called foreign import substitutes such as barley, sorghum and DDGS poured into the country in a rush. Add to that factors such as ample supply, weak demand and temporary storage reform in the 2015 corn market, and corn prices fell continuously. But starting from September 1 last year, the Ministry of Commerce began placing barley, sorghum and DDGS under a new automatic licensing system, while also conducting an anti-dumping investigation into US DDGS, causing imports of substitutes to decline markedly in the first half of this year.

By contrast, corn imports in the first half of this year only increased. Customs data show that from January to May 2016, cumulative corn imports reached 2.8379 million tons, up 59.64% year on year, and the import volume in April and May alone exceeded one million tons. The source countries favored by China for corn imports are the United States and Ukraine. In the first five months, China imported a total of 2.65 million tons of corn from Ukraine, accounting for the vast majority of total imports; corn imports from the United States were about 130,000 tons.

By rights, for a major producing country with annual corn output of more than 200 million tons, why does it still import so much corn every year? Besides the cost-effectiveness of foreign corn, the shortage of corn circulating at the grassroots level after the completion of temporary storage purchases is also a main reason for the phased increase in imports. But do not forget that the 7.2 million ton import quota is still sitting there, and with the decision-making level holding high the banner of "de-stocking," the country still has 260 million tons of corn that has not been digested. By comparison, this year's imported corn cannot stir up any waves at all.