Farm Progress is part of the Informa Markets Division of Informa PLC

This site is operated by a business or businesses owned by Informa PLC and all copyright resides with them. Informa PLC's registered office is 5 Howick Place, London SW1P 1WG. Registered in England and Wales. Number 8860726.

Serving: United States

China restricts corn imports

JJ Gouin/iStock/Getty Images Flags of China and United States of America covered in corn kernels. Concept of Chinese and American agriculture imports, exports, trade war, agreement and tariffs
China canceled less than 1 million tons of corn, but corn futures in Chicago slid toward one-month low.

By Bloomberg News

China is clamping down on some corn imports amid concern that overseas purchases have spiraled out of control, prompting several feed mills to cancel their U.S. cargoes.

Chinese customs authorities are restricting imports into free trade zones, which are not counted toward an official annual purchase quota, according to people with knowledge of the matter. The total U.S. corn cancellations are estimated to be less than 1 million tons, said two of the people, who asked not to be identified as the matter is private.

The crackdown is targeted at businesses that have set up blending facilities in the free trade zones, according to the people. These facilities allow the firms to mix the imported corn with other raw materials to produce livestock feed that enable them to profit from zero-tariff imports, the people said. Calls to Chinese customs outside business hours went unanswered.

Corn futures in Chicago slid as much as 2.8% toward a one-month low. Prices are still up about 25% this year.

Those canceled shipments are a small amount compared to more than 20 million tons of American corn that China has purchased this season. The Asian nation has been a key source of demand for the grain to feed its recovering hog herd, helping to push prices to multi-year highs. Imports from the U.S. have soared as Beijing also seeks to fulfill its trade deal commitments.

The increased scrutiny by Beijing over its corn imports comes as the broader market focuses on whether the country will continue its heightened purchases of raw materials from grains to metals to fossil fuels. Prices across a variety of products have soared this year partly because of Chinese demand, raising import costs and sparking fears over inflation in the Asian nation.

In recent weeks, Beijing has stepped up its fight against the broad surge in commodities prices, threatening punishment for violations ranging from excessive speculation to spreading fake news. While its latest efforts have focused on metals, the government is also seeking to ensure stable food supply by boosting domestic output and imports of grains.

Corn quotas

China allocates annual corn import quotas to state and private firms. State-owned Cofco Corp. may at times receive an allowance to buy an additional amount that it resells domestically to private mills or to replenish state reserves.

The quotas for 2021 are set at 7.2 million tons. Imports outside the quota are possible, but may incur tariffs of up to 65% of the purchase price. Shipments into bonded zones are exempt from duties.

The proliferation of businesses that are shipping corn into bonded zones and blending them for animal feed has alarmed authorities, who are seeking to control imports and maintain the quality of feed products.

Last month, Shandong province shut down a feed producer located at a local bonded zone after its product was found to have fallen short of protein requirements. The plant mainly blended corn with a low amount of distillers dried grains, said one of the people.

All the cancellations will be of old U.S. corn crop from the 2020-21 marketing year, the people said. More than 15 million tons of American corn have been purchased for state stockpiles from old and new crops, two of the people said.

--With assistance from Kim Chipman and Michael Hirtzer.
© 2021 Bloomberg L.P.
TAGS: Corn Hog China
Hide comments


  • Allowed HTML tags: <em> <strong> <blockquote> <br> <p>

Plain text

  • No HTML tags allowed.
  • Web page addresses and e-mail addresses turn into links automatically.
  • Lines and paragraphs break automatically.