CCM: Import volumes of corn substitutes all reduce in Feb

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Publish time: 13th May, 2016      Source: CCM
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    After two-year rises, import volumes of sorghum, barley and other substitutes for corn all reduced in Feb. 2016 affected by the Spring Festival and the dropping corn price. CCM predicts that figures would continue declining due to the decreasing corn price. 
  

  

    
  

  

    
  

                                                                        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

                                                                                                                                                                                                                                                                     
          

            Product           

        
          

            Feb. 2016 (tonne)           

        
          

            MoM change (%)           

        
          

            Cassava starch           

        
          

            123,384           

        
          

            -28.14           

        
          

            Sorghum           

        
          

            566,866           

        
          

            -38.65           

        
          

            Barley           

        
          

            261,766           

        
          

            -27.76           

        
          

            Corn starch           

        
          

            130           

        
          

            -25.91           

        
          

            DDGS           

        
          

            261,637           

        
          

            -9.98           

        

  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

  

  

  

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  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