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China may displace Japan as the world’s largest corn importer as early as 2014, as demand for meat and feed grains expands along with its middle class, the U.S. Grains Council said.
“It could be a matter of two to three years,” Thomas Dorr, president of the council, said in an interview. “China has more than 4 million tons booked and delivered already.” Japan bought 15.3 million metric tons last year, according to the country’s agriculture ministry.
Imports by China, the second-biggest consumer after the U.S., are forecast to more than quadruple to 4 million tons in the 2011-2012 from a year earlier, according to an April 10 report from the U.S. Department of Agriculture. Inbound shipments may grow to a record 5.5 million tons in the year starting Oct. 1, Dorr said. Rising demand could support futures, which have lost 4.8 percent this year on the prospect of record U.S. output.
“To curb inflation in food products, the Chinese government may allow further increases in corn imports,” said Kazuhiko Saito, an analyst at commodity broker Fujitomi Co. in Tokyo. “Expanding demand may limit losses in prices, although China alone cannot absorb all the expanding output globally.”
Corn for July delivery traded at $6.1525 a bushel on the Chicago Board of Trade at 12:09 p.m. Tokyo time. Futures fell to $6.11 yesterday, the lowest level for a most-active contract since March 30, on speculation favorable weather will bolster crops in the U.S., the world’s biggest grower and exporter.
“I don’t anticipate the corn market is going to go significantly higher relative to what we experienced over the last couple of years,” Dorr said in Tokyo yesterday. “If the weather is good, and we planted 95 million acres, the corn price is going to be pressured.”
Futures traded as high as $7.93 a bushel last year, nearing a record $7.9925 reached in 2008, as demand growth led by emerging markets and ethanol production outpaced production, depleting stockpiles. Higher prices made traditional importers such as Japan and South Korea seek cheaper alternatives from the Black Sea region and Africa.
“Our biggest concern is a competition,” Dorr said. Grain at $6 to $7 “has stimulated interests in producing corn in places that we hadn’t thought about before.”
Japan may cut its reliance on U.S. shipments to the lowest level ever after buying a record volume from Ukraine and Brazil, according to Nobuyuki Chino, president of Continental Rice Corp. in Tokyo. Japan’s imports from the Black Sea area including Ukraine may jump to 1.8 million tons this year from about 55,000 tons in 2011, while buying from Brazil surged 46 percent last year, he said in an interview last month.
Imports by Japan, which dropped 5.5 percent in 2011, are unlikely to shrink further if food producers such as Nippon Meat Packers Inc. (2282) and Meiji Holdings Co. (2269) “capitalize on the market opportunities of China’s demand for food,” Dorr said.
Shipments last year declined to the lowest level since 1986 as a record earthquake and tsunami in March destroyed feed plants, and radiation from a crippled nuclear plant in Fukushima tainted beef. Imports reached a peak of 17 million tons in 2003.
Growth in Asia and other emerging economies means about 1 billion people will join the middle class by 2020, boosting demand for meat and dairy products as well as feed grains, Dorr said.
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