(Bloomberg) --
A Chinese government official rebuffed the idea that the nation's massive corn and wheat imports are to blame for the jump in international prices, saying the coronavirus pandemic and uncertainty in global food trade drove “panic” in the industry.
Grain prices have risen because of export restrictions by major suppliers and the stockpiling of food reserves by some countries, the Economic Daily reported, citing the views of Huang Hanquan, an official with the National Development & Reform Commission.
Huang said it's “irresponsible and completely contrary to the facts” to pin rocketing global food prices on China's imports. The country's grain imports only account for a 10th of global trade, with the majority being soybeans, and have a limited impact on international food prices, according to the report.
Crop prices have been on a tear as China's buying gained pace in recent months amid tighter-than-expected world grain and oilseed supplies and the need to feed a massive number of hogs as its herd recovers from African swine fever. The second-biggest economy surpassed for the first time ever an annual corn-import quota set by the World Trade Organization as purchases in October hit a 2016-high.
China's Set to Import More U.S. Corn and Squeeze Global Prices
The reason for surging imports is the rapid increase in domestic demand, as the recovery in hog breeding bolstered consumption of corn and soybeans, and the nation embarked on an aggressive expansion of corn refining capacity, said Huang, who is head of NDRC's price monitoring information center.
After years of reducing state corn stockpiles and acreage since 2016, China's corn supply deficit has widened and imports are needed to fill the gap. Foreign supply has become an attractive option as the landed cost in China is about 500 yuan ($76) a ton cheaper than domestic output, according to Huang.
The self-sufficiency rates of China's grains have remained above 95%, but the nation may need to import from multiple sources to guarantee national food security, Huang said. He also warned about speculation in the international futures market, adding this has led to a coordinated rise in spot prices.
©2020 Bloomberg L.P.
With assistance from Bloomberg
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