BLBG:China Rising Corn-Import Demand to Sustain Rally, Rabobank Says
Surging import demand for corn in China, the world’s biggest livestock producer, may help sustain a record rally spurred by a drought in the U.S. Midwest, Rabobank International said.
Imports may rise to 7 million metric tons in the marketing year beginning Oct. 1 from about 5 million tons this year, Daron Hoffman, Shanghai-based director of research, said in an interview. That compares with 2 million tons next marketing year estimated by the U.S. Department of Agriculture on Aug. 10.
Corn surged 23 percent this year as the worst U.S. drought since 1936 slashed output. China, a net exporter before 2010, will likely import a record 5 million tons in the year through Sept. 30, according to the USDA. Shipments in the first 10 months of the 2011-2012 marketing year were 4.2 million tons, near a record 4.3 tons in 1995-1996, customs data show.
Prices may rise much higher in the second half of 2012 as China increases its purchases, Hoffman said yesterday, without giving a forecast. His estimate for imports in the 2012-2013 year is higher than the USDA forecast because he sees a smaller increase in China’s output this year, he said in Shanghai.
An increase of 1 percent to 1.5 percent in China’s harvest is the “best-case scenario,” Hoffman said, citing his own analysis. The USDA last month forecast China’s production may gain 3.7 percent this year.
Corn for December delivery traded at $7.975 a bushel on the Chicago Board of Trade at 12:47 p.m. in Shanghai and rose to a record $8.49 Aug. 10. The most-active contract on China’s Dalian Commodity Exchange traded at 2,366 yuan ($373) a ton and has climbed 4.1 percent this year.
China’s demand needs to be met by imports “no matter what the price,” Nathan Broders, director of feed ingredients at INTL FCStone Inc., said at an interview in Shanghai yesterday.
Global prices of corn and soybeans will need to stay at a high level for years as a “structural requirement” to encourage farmers to boost planting and increase inventory drained by China-led growing consumption, according to Hoffman.
To contact Bloomberg News staff for this story: William Bi in Shanghai at wbi@bloomberg.net
To contact the editor responsible for this story: Jake Lloyd-Smith at jlloydsmith@bloomberg.net
