Beijing wants to issue higher import quotas for corn

The Chinese government is expected to issue more corn import quotas in the new year, as the country's feed demand increases due to a shortage of supplies.
As part of the already approved quotas, Beijing has bought around 12 million tons of corn from the U.S. and around 5 million tons from other countries, including Ukraine, for the 2020/21 marketing year, according to a Singapore-based international trade source. China, which requires around 280 million tons of corn per year, had huge corn reserves in previous years. These are now almost sold out, which means that grain buyers are buying alternatives such as rice and wheat on the world market and are boosting corn imports. Domestic corn prices hit a record high this month due to supply bottlenecks: As China is consuming more grain, world market prices are likely to continue to rise.
"China could change the landscape of the world corn balance in the next ten years by becoming a major importer," said specialist broker in the USA.
So far, Beijing has implemented an annual low tariff quota system of 7.2 million tons for corn imports.Imports from outside the quota are possible, but may be associated with duties of up to 65% of the purchase price.
Two China-based sources and a Singapore-based trader said Beijing is considering giving more tariff quotas to buyers amid tighter inventory levels.
"(The government) will review the supply-demand situation and may later issue additional quotas that could flow into state reserves," said one of the sources familiar with the government plan.
According to estimates by the US Department of Agriculture, China is already on par with Japan as the world's second largest corn importer after Mexico (18.3 million t) in terms of corn imports for 2020-21 even before additional quotas are granted.
So far this calendar year, China has booked deliveries that are well above the official annual quota for corn. According to this, COFCO receives special low tariff quotas for at least 5 million tons in order to book mainly US corn deliveries for delivery by April 2021.
Under the terms of these additional quantities, COFCO will import the maize at the lower duty rate.There are two reasons:
"One is that China needs corn. Second, China has a deal with the United States that must be fulfilled."

Hansa Terminhandel GmbH
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