Xi Yinsheng, director of the Macroeconomic Research Office of the Rural Economic Research Center of the Ministry of Agriculture, recently gave a media interview where he estimated that corn imports in 2021 may reached 29 million tons, and imports of alternatives such as sorghum, barley, and DDGS may reach 25 million tons.
During the interview he also stressed that “corn wouldn’t be the next the soybean”, referring to how China’s imports of soybeans have soared in recent decades, leaving China as a relatively small soybean producer relying heavily on imports.
In his view, the market will solve the problem. High corn prices will encourage farmers to plant more, the growth rate of corn demand will slow, and the structural supply deficit will fade away.
However, this seems like an optimistic scenario. China just reported its largest ever corn crop, but imports are also expected to break records.
In the interview he mentions that between 2012/13 and 2015/16, the temporary reserve purchased 304 million tons of corn. When the temporary stockpiling program ended, this grain was auctioned off, leading to several years where the corn supply was artificially high as supplies were a combination of new crop corn, plus old reserves.
Hence, demand expanded to absorb the large supply of corn. Since 2017/18, China’s corn demand has been larger than its production.
That’s ultimately a difficult problem to fix. Unless China dramatically increases production, or sharply cuts demand, imports will likely remain high.