Significant reduction in import substitution boosts confidence in the domestic corn market

Since the second half of 2024, China's corn imports have continued to decline. From the perspective of cumulative import volume, from January to November 2024, China's corn import volume was 13.32 million tons, a year-on-year decrease of 39.9%, the lowest since the same period in 2021, and a significant decrease of 51% compared to the same period in 2021. From the perspective of monthly import volume, since the second half of the year, the monthly import volume of corn has continuously hit a new low. Since August, the import volume has been less than 500000 tons for four consecutive months, reaching a low in nearly five years. From the perspective of feed substitutes, the total import volume of corn, sorghum, barley and other feed substitutes decreased by about 5% year-on-year from January to November. According to customs data, the average taxable cost of imported sorghum since 2024 is about 2370 yuan/ton, significantly higher than the prices of imported corn and barley, and even temporarily higher than the prices of domestically produced corn in southern ports. Grain consuming enterprises generally reflect that imported sorghum has little value as a substitute for animal feed and is mainly used for brewing.

In terms of the proportion of imported grains (corn, barley, sorghum) in feed formulas, according to the heads of several large feed breeding enterprises in the south, considering factors such as the quantity and cost-effectiveness of imported corn, barley, and sorghum, enterprises have continuously reduced the proportion of imported grains added to energy feed since the second half of the year. Currently, most enterprises no longer use imported grains in feed formulas and mainly rely on domestic corn. From the prediction of the annual import quantity of corn for new crops, domestic and foreign institutions also unanimously recognize that China's corn import volume will continue to significantly decrease. The International Grains Council (IGC) expects China's corn imports to be 15 million tons in 2024/25, a decrease of 2 million tons from the previous forecast and a 38% reduction from the previous year's imports.

Several import companies have also stated that considering various factors such as domestic policies, production and demand, and profits, the demand for purchasing feed substitutes has significantly decreased. From the monitored procurement situation, it can be seen that China has hardly made bulk purchases of US corn since November. As of the first month of December 12th, China had purchased less than 1000 tons of US corn, and for three weeks, it had not purchased any US corn at all. At present, it is the peak period of domestic corn sales, and the number of imported substitutes has decreased, especially the significant reduction in corn imports, which is conducive to reducing the supply pressure of the domestic corn market and increasing the consumption demand for domestic corn. The further decline in the import procurement of feed substitutes in the later stage is conducive to boosting confidence in the domestic corn market. It is reported that most feed breeding enterprises in the southern sales area have proactively adjusted their formulas and increased contract purchases for long-term domestic corn. Several industry experts have also stated that the reduction in imports of feed substitutes, coupled with a series of measures to stabilize domestic prices, such as China Grain Reserves Corporation continuously increasing its collection and storage points and quantities in Northeast China, and suspending the auction of imported corn in sales areas, will effectively increase the consumption demand of grain consuming enterprises for domestically produced corn, boost confidence in the corn market, and promote the stabilization and recovery of domestic corn prices.