Industrial use of corn in China, the second-biggest consumer, may grow at the slowest pace in at least five years as the economy cools, curbing the need for imports, says state-affiliated researcher Cngrain.com.
The amount processed may expand by 5 percent in the year ending Sept. 30 to 55 million metric tons, compared with 11 percent last year, Cngrain.com analyst Zhang Zhixian said in an interview on Dec. 27. The researcher is owned by China Grain Reserves Corp., which manages state grain inventories.
Lower Chinese demand for imported corn may pressure prices in Chicago, which have tumbled 17 percent since Aug. 31 on high global grain supplies and concern that Europe’s deepening debt crisis and a slowing global economy may sap demand. China’s economy will grow 8.5 percent next year, down from 10.4 percent in 2010, the Organization for Economic Cooperation and Development projected on Nov. 28.
“China’s economic growth is causing people a lot of concern,” Chen Baomin, a manager at Jilin Grain Group Co., said by phone from Shandong. “High corn prices have also caused industrial corn demand to slow.”
Spot prices for corn in Dalian surged to a record of more than $395 a ton in September, according to data from Shanghai JC Intelligence Co.
“Industrial corn consumption is much more dependent on the economy, which is seen slowing,” Cngrain.com’s Zhang said by phone from Zhengzhou. “The rapid growth of the sector is over, and it is settling down to a modest and stable rate,” Zhang said.
Non-feed usage of corn has jumped about fivefold in the last 10 years, making up about one third of the total, Zhang said. It has grown by more than 10 percent a year since 2007-2008, and helped deplete China’s surplus, according to Zhang.
China imported 1.3 million tons of corn in 2009-2010, the most in 14 years, according to data from the U.S. Department of Agriculture. It may have also ordered 4.2 million tons this year to boost its state reserves, Zhang said.
Corn for March delivery fell 0.2 percent to $6.41 a bushel on the Chicago Board of Trade at 5:57 p.m. in Shanghai.