Source: Bing

In Feb. 2016, some substitutes for corn recorded MoM declines in import volumes, according to China Customs:

Sorghum: 566,866 tonnes, down by 38.64%

Barley: 261,766 tonnes, down by 27.76%

Besides, some downstream products of corn also recorded MoM falls in import volumes in Feb.:

DDGS: 290,653 tonnes, down by 37.78%

Corn starch: 130 tonnes, down by 25.91%

Notably, the import volume of cassava starch (substitute for corn starch) also reduced by 28.14% to 123,384 tonnes in Feb.

Import volumes of substitutes for corn, corn starch and downstream products of corn, Feb. 2016

Source: China Customs

In fact, in recent years, import volumes of some corn substitutes rose rapidly. According to China Customs, in 2015, import volumes were:

Sorghum: 10,700,297 tonnes, up by 85.27% YoY

Barley: 10,732,338 tonnes, up by 98.25% YoY

It is the continuously rising domestic corn price that pushed up the import volumes of substitutes. Enterprises hoped to relieve pressure on cost by importing substitutes for corn. Meanwhile, the widened price gap between domestic and imported corn increased the price difference of downstream products, stimulating the imports. Data from China Customs show that China imported 6,820,891 tonnes of DDGS in 2015, up by 26% YoY.

Import volumes of cassava starch, sorghum and barley in China, Jan. 2013-Feb. 2016, tonne

                                                         Source: China Customs

There are following factors reducing import volumes of corn substitutes in Feb. 2016:

Firstly, China's enterprises usually suspend production during the Spring Festival holiday for nearly half a month in Feb. Therefore, some importers will reduce/ suspend the import volumes of some agricultural products.

Secondly, substitutes lose their price advantages due to the falling corn price. According to CCM's research, since H2 2015, the market price of corn has slumped in spite of a slight rebound in Nov. 2015. In 2016, the situation is even worse - the price dropped to USD287.53/t (RMB1,880/t) in March, the lowest since Jan. 2014. Corn won back market shares by its low price, which weakened the demand for its substitutes.

Market price of corn in China, Jan. 2014-March 2016

                                                                       Source: CCM

The purchase policy of corn for temporary storage has been changed to "marketized purchase + subsidy" in Northeast China. Although the specific subsidy measures have not been disclosed yet, 250 million tonnes of corn of the state is waiting for sale. Because of the high inventory and the changing policy, corn price will drop further, which will affect the demand for substitutes. Importers will be cautious for purchasing.

In addition, the General Administration of Quality Supervision, Inspection and Quarantine issued the Management Method of the Inspection and Quarantine on Imported and Exported Grains on 20 Jan., 2016 and will implement it on 1 July. At that time, unqualified imported corn, sorghum, barley and DDGS will be returned under stricter inspection. So, CCM predicts that import volumes of sorghum, barley and other corn substitutes will decline further in later period.

This article comes from Corn Product China News 1604, CCM

About CCM:

CCM is the leading market intelligence provider for China’s agriculture, chemicals, food & ingredients and life science markets. Founded in 2001, CCM offers a range of data and content solutions, from price and trade data to industry newsletters and customized market research reports. Our clients include Monsanto, DuPont, Shell, Bayer, and Syngenta. CCM is a brand of Kcomber Inc.

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Tag: corn substitutes

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