China's corn imports will prove smaller than thought thanks to a switch by feed mills to sorghum, for which purchases will hit an all-time high, the International Grains Council said, foreseeing record barley buy-ins too.
The council, an intergovernmental group, hiked by 400,000 tonnes to 1.0m tonnes its forecast for China's sorghum imports in 2013-14 - and hinted that further upgrades could yet be in store.
The upgrade - to a level three times that last season, the current record high – reflected a spate of purchases in the US, from where private Chinese feed mills have bought 800,000 tonnes, and are viewed as "likely" to make higher purchases.
"There is the potential of China purjhcasing up to 1m tonnes from the US along," IGC analyst Chris Lawson told Agrimoney.com.
Even the current figure is far higher than the 375,000 tonnes of Chinese orders shown by US Department of Agriculture data, although the IGC has previously signalled that Washington data could underestimate the real figure.
Cheaper than corn
Chinese buyers have also purchased considerable sorghum from Australia, purchases could account for "60-70% of a potential total 1m-tonne [Australian] export programme this year", according to broker Pentag Nidera.
The appetite for the grain reflects in part the high price of domestic corn as a feed ingredient, and also the ability to import sorghum into China duty free.
"Sorghum is not subject to a tariff rate quota, and with US supplies priced well below domestic corn in China, and corn import quotas already exhausted, private traders have opted to import sorghum and include it in feed mixes for the first time," the IGC said.
Indeed, the council trimmed its forecast for China's corn imports in 2013-14 by 200,000 tonnes to 7.0m tonnes, despite the fact that it is "very competitively priced" compared with domestic supplies, which face "prohibitive" costs for transportation from growing regions.
"Despite a further drop in world [corn] prices, [Chinese] buying interest has recently slowed, with some local traders reporting that private feed mills have now used their allocated 2.9m-tonne share of the 2013 tariff rate quota."
Even 7.0m tonnes would be a record for Chinese corn imports, which are a highly sensitive topic for markets, given the potential - with the country consuming 220m tonnes this season – for a far higher figure .
Record barley imports too
The IGC also upgraded its estimate for China's barley imports, by 200,000 tonnes, to an all-time high of 2.6m tonnes, topping the 2.5m tonnes reached two seasons ago.
The extent of the buy-ins, essentially all of malting barley, of various grades, reflects ideas that the country's harvest fell short of expectations, with the IGC cutting its production forecast by 200,000 tonnes to 2.3m tonnes.
The comments come as China is about to receive its first load of new crop French malting barley, with RMI Analytics noting this week that, in Rouen, "a vessel of 39,000 tonnes was scheduled for loading".
The malting barley consultancy also highlighted official talks to permit Chinese imports of Ukrainian barley, and soybeans.
Corn, wheat revisions
The comments came as the IGC nudged higher by 1m tonnes to 1.930bn tonnes its forecast for world grains production in 2013-14.
The estimate for corn production was trimmed by 2m tonnes to 943m tonnes, with the forecast for carryout stocks reduced in line, to 148m tonnes - still up 22% year on year and a figure "well above average".
The forecast for wheat production was upgraded by 2m tonnes to 693m tonnes, with the estimate for end-season inventories lifted by 4m tonnes to 180m tonnes, reflecting also revisions to historical data.