South America Calling

China Lifts Restrictions on Brazil Corn Imports

By Alastair Stewart

China lifted restrictions on Brazilian corn imports, opening a valuable new market for the South Americans' growing production, a Brazilian farm official said.

The accord was signed Wednesday in Canton, China, during a visit by Brazil's Vice President Michel Temer, according to Glauber Silveira, president of the Brazilian Soybean and Corn Growers Association (APROSOJA).

The deal comes at an excellent time for Brazilian farmers, who are stuck with a considerable corn surplus following the recent bumper crop.

China is a major corn producer and traditionally sources its additional needs from the U.S. However, surging domestic demand from a growing middle class has China looking for other import options. In August, China imported its first shipment of Argentine corn.

The Middle Kingdom is expected to import 7 million metric tons of corn in the 2013-14 season, according to the U.S. Department of Agriculture.

Brazil hopes to eventually export 10 mmt per year to China. It would love to ship that volume this year in order to ease pressure on local prices, which are below production costs in some areas, but the truth is that shipments will likely grow incrementally amid stiff competition from the U.S.

Brazil's government pegs local exports at 20 mmt in 2013, down from 22.3 mmt in 2012.

Brazilian corn output has risen dramatically over the last five years, boosted by the practice of planting the grain as a second crop after soybeans.

In 2012-13, Brazil's output rose 10% to 87 mmt, according to Agriculture Ministry.

However, planted area will likely shrink in 2013-14 as there is little money to be made from the grain.

Brazil is a regular participant in the corn export market but expensive logistics and some high production costs means it struggles to compete with the U.S. outside its July-October export window.

(AG)

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