China feed mills turn to U.S. sorghum as corn quotas run out
Feed mills such as New Hope Liuhe Co Ltd and Guangdong Haid Group make animal feed from grain to cater to rising meat consumption as China urbanizes.
Besides private firms, state-owned COFCO and Sinograin have also used up their total corn import quotas of 2.6 million tonnes, said one trading source.
Price distortions brought about by the country's stockpiling policy have driven buyers of agricultural commodities to overseas markets, and at about 2,000 yuan per tonne, U.S. corn prices are at least 13 percent lower than those in China.
The government said in July that it would raise the state purchase price of corn by nearly 6 percent to 2,260 yuan per tonne from farmers in the major producing areas in the northeast, with prices rising to more than 2,450 yuan per tonne for feed mills in Guangdong in the southeast.
With China continuing to stockpile corn, the price gap could widen further, some analysts predicted.
"If the government continues to stockpile corn next year and the year after next, corn imports without import quotas subject to a full tax rate of 65 percent may even be possible some day," said Shi Yan, chief analyst with Xinhu Futures Co. Ltd. ($1 = 6.1205 yuan)