China’s government is discussing permits for millions of tonnes of additional corn imports over the next year, three industry sources told Reuters, amid a surge in animal feed demand and after storms and drought damage tightened domestic supplies.
A round of new import orders from China would make it the world’s top importer of corn for the first time and likely drive up global prices of corn and other grains. That would amplify food inflation caused by disruptions to global supply chains due to the coronavirus pandemic.
Food security has emerged as a global theme during the pandemic, exacerbated in China by a disease that has devastated the hog herd over the past two years and left pork supply tight. China is the world’s largest pork consumer and second-largest corn consumer.
Beijing previously held massive reserves but has almost emptied them at auctions, leading to grain buyers buying alternatives such as rice and wheat, as well as boosting corn imports. Domestic corn prices hit record highs this month on shortages after a typhoon, a drought and a pest hit crops.
Two China-based sources and a Singapore-based trader with knowledge of import discussions said Beijing was considering issuing more lower-tariff quotas for buyers to ease the domestic shortage. These quotas encourage imports by exempting shipments from most of the 65 per cent tariffs that would otherwise be levied by Chinese customs.
“The government will review the market supply-demand situation, and might issue more quotas later that could go into the state reserves,” said one of the sources familiar with the government plan.
The people with knowledge of the deals declined to be identified because they are not authorised to speak to media.