Giant China corn stocks seen cutting ethanol imports two-thirds
http://www.chicagotribune.com/news/sns-wp-blm-corn-china-d925dd9a-8e18-11e5-934c-a369c80822c2-20151118-story.htmlNovember 18, 2015 at 4:09 PM
China's ethanol imports will slump two- thirds next year as the country makes more of its own biofuel amid a surge to a 15-year high in the nation's stockpiles of corn, used as a raw material, according to Green Pool Commodity Specialists.
Shipments into China will reach 150 million liters (40 million gallons) of ethanol next year, down from 441 million liters this year, the Brisbane, Australia-based sugar and biofuels researcher estimates. Chinese ethanol producers will use part of their corn stocks that can no longer be used for food or feed to make the fuel, Director Tom McNeill said.
Corn stocks in China will rise 14 percent to 114 million metric tons in the 2015-16 season, the highest since 1999-2000, the U.S. Department of Agriculture says. Some industry estimates are as high as 170 million tons and there are reports of "significant mold damage" to part of the inventory, the USDA's Foreign Agriculture Service said in a report this month. Chinese corn production will reach a record in 2015-16, USDA estimates show.
"There's a pretty compelling story that they won't need to import as much," McNeill said in an interview at the International Sugar Organization conference in London. "It makes sense to use stockpiles to make ethanol."
China's corn-ethanol plants are operating at 50 to 60 percent of capacity, so they are able to boost output, he said. The ample corn supplies will also temper resistance from the food lobby over the amount of grain that goes into biofuel production, he said.
The level of the supplies will eat into sugar's market share. China's sugar consumption in 2015-16 will be 200,000 tons lower than previously expected as corn products are used as a substitute, Green Pool estimates. The price of corn sweetener is already lower than sugar and some soft drinks makers are switching to high-fructose corn syrup.
Chinese sugar imports will drop to 5.33 million tons in 2015-16 from 5.71 million tons, according to Green Pool. The country will buy less because of high stockpiles, McNeill said. He estimates sugar inventories will be 10 million tons in 2015-16 from 10.85 million tons a year earlier.
"There's no way they need 5.7 million tons of imports," he said. "Chances are that they will reduce stockpiles throughout the season."
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