October 28, 2014
Price gap between Chinese and imported corn widening
The gap between prices of imported and local corn continues to widen in China, leaving the government worried about a spike in smuggling.
Vowing to keep local corn prices stable to protect Chinese farmers, China''s vice premier Wang Yang told a national conference recently that the government would step up its crackdown on grains smuggling while at the same time tightening control on imports.
China currently buys corn at a hefty CNY2,220-CNY2,260 (US$362.9-$369.5) per tonne, while its imported equivalent only costs US$143 per tonne.
The huge price gap has made imported corn more attractive for end-users like feed mills.
Allowing more imports, however, would lead to oversupply and create stockpiling problems in the country.
Wang said record stockpiles would create storage problems for the current harvest.
Already China is believed to have 100 million tonnes of corn stocks- equivalent to about half year of domestic consumption- before the current harvest began in September.
In fact, the vice premier said, companies are being encouraged to stockpile grains in order to ensure that farmers are able to sell their crop.
To cut oversupply, China will strengthen control over grains imports and crack down on illegal activities like smuggling, he said.
"We will strengthen import and export controls for grains while severely cracking down on irregularities like smuggling in order to stabilise the domestic market," Wang said.
China''s rejection of cheap US corn cargoes on the grounds that it contained a genetically-modified strain not permitted for import was also seen as part of Beijing''s efforts curb cheap imports and support domestic corn prices.
But buyers in the world''s No.2 corn consumer have turned to non-traditional exporters, including Bulgaria and Ukraine, to fill the gap following the restrictions on US supplies. Cases of smuggling are also said to have increased, according to news reports.