中国和巴西签订玉米供应协议

China, Brazil Sign Corn-Supply Deal

Country Is Trying to Lower Dependence on U.S., Which Supplies More Than 90% of Its Imports
 

More corn from Brazil, above, dents the U.S. share of China's imports. Reuters
 
BEIJING—China said Tuesday it will allow sizable imports of Brazilian corn, marking another step in the Asian giant's moves to lessen its dependence on the U.S. for the vital grain.

The U.S. supplies more than 90% of China's corn imports, but its share of the world's fastest-growing corn market has been pared down as Beijing has sought in the last two years to broaden its supply.

China's shift to a protein-rich diet and its rising industrialization are changing global trade flows. China's demand for corn rose 39-fold in volume between last year and 2009, though imports so far represent only about 2% of China's total corn consumption.

Senior government officials have warned that the country may face a corn-supply deficit in coming years due to increasing demand from livestock and food-processing industries that turn the grain into lucrative byproducts such as sweeteners, adhesives and starches.

This demand is likely to keep rising. Top agriculture officials told reporters in January that China is likely to import even more corn in coming years, indicating that its ventures into the global corn market are "an inevitable choice."

The agreement with Brazil, signed by China's General Administration of Quality Supervision, Inspection and Quarantine on March 31, adds to similar deals struck with Argentina in February 2012 and Ukraine the following November. Analysts say Tuesday's formal acknowledgment was likely the culmination of several months of work to agree on the kinds of Brazilian corn that China would deem acceptable for import.

Brazil's agriculture minister, Antonio Andrade, told reporters in November that the two countries had reached a phytosanitary agreement—a technical document that sets out the terms of pest- and disease-free plant imports—but hadn't said when it would be formally approved.

Brazil is the world's second-largest corn exporter after the U.S., but it isn't the first Latin American nation to score such an arrangement in the corn trade with China. Argentina, the world's third-largest corn exporter, sent China its first large-scale corn shipment totaling 66,000 metric tons in July.

Brazil and Argentina have sold China small shipments of corn in the past, amounting to a few hundred tons on each occasion. But product-safety deals such as the Sino-Brazil phytosanitary pact typically pave the way for shipments that can run to tens or even hundreds of thousands of tons in a single month.

A cornfield near St. Cloud, Minn. More than 90% of China's corn imports currently comes from the U.S. Associated Press
 
Analysts say the delay in China reaching out to Brazil on this front may be due to logistical factors, including infrastructure. "Brazil's supply of corn can be fairly volatile and unstable," said Rabobank analyst Chenjun Pan.

Brazil is only one among at least seven other nations from which China has been trying to secure more corn.

In 2011, only the U.S., Laos and Myanmar supplied China with corn shipments exceeding 10,000 tons. But last year, China added Argentina and Ukraine to that roster. It has also moved to increase its supply from other countries including Russia and India.

At its peak in 2012, the U.S. accounted for 98% of China's corn imports. Its share last year fell to 91%.

Meanwhile, Chinese quality watchdogs last year rejected a record 545,000 tons of U.S. corn it said was tainted with a genetically modified strain that Beijing hasn't yet permitted for import.

Still, high import levels in recent months—including purchases from the U.S.—indicate that China continues to be an opportunistic buyer in global markets. Global corn prices have begun to tick upward in recent weeks, but remain around 34% lower than their peak of $333 a ton reached in July 2012 due to strong global harvests.

China continues to make inroads elsewhere in securing its share of global grains and food. Its largest grain trader, Cofco Corp., paid an estimated $1.2 billion for a majority stake in Dutch grain trader Nidera NV and $1.5 billion in a consortium for a majority stake in Noble Group Ltd.'s agribusiness division.

Write to  Chuin-Wei Yap at chuin-wei.yap@wsj.com