China s Corn Processing Industry: Its Future Development and Implications for World Trade Prepared by National Grain & Oils Information Center,China XiaoHui Wang April, 2007
Agriculture Production - No. 1 in world wheat production - No. 2 in world corn production - No. 1 in world rice production - No. 2 in world broiler production - No. 1 in world pork production
Agricultural Commodity Production (Million MT) Output % of World Rank Wheat 97 15% 1 Corn 135 20% 2 Soybeans 18 8% 4 Rice 128 31% 1 Broiler 10 17% 2 Pork 50 52% 1 Beef 7 14% 4 Milk 29 6% 5
Agricultural Commodity Consumption (Million MT) Consumption % of World Rank Wheat 101 16% 1 Corn 133 20% 2 Soybeans 45 21% 2 Rice 135 32% 1 Broiler 10 17% 2 Pork 49 52% 1 Beef 7 14% 3 Milk 29 6% 5
Corn Industrial Uses China s industrial uses of corn were relatively small in late 1990s and early 2000s, accounting for about 10 percent of the domestic corn use. After 2003, good profit margins in corn processing and rising energy prices have attracted a lot of investment into the corn processing industry including starch and ethanol production. Average growth of corn industrial use was above 20 percent annually. China s corn industrial uses increased from below 9 million metric tons in 1996 to about 30 million metric tons in 2006.
China s Corn Processing Industry and Its Demand for Corn
Characteristics of Corn Processing Industry China s corn processing industry is mainly concentrated in northern and northeast China due to the easy access to its raw inputs. The concentration is expected to increase because of more processing capacity being built in these two regions due to the logistic considerations as well as the government s environmental policies. Over the past ten years, the corn processing industry was dominated by private investment. But state-owned companies are entering the industry at a fast pace. At present, the share of foreign investments in China s corn processing industry is relatively low.
Starch Processing Demand for Corn Various starches are produced in China utilizing a variety of different grains. Corn is the major source in China s starch production, accounting for 92 percent of the total starch output in 2005. Cassava starch accounts for about 5 percent of the total starch output, a distant second place. Potato, sweet potato and wheat starch account for 3 percent of the starch production in aggregate. Total starch production has increased from 2.2 million metric tons in 1995 to 11.1 million metric tons in 2005, growing at 17 percent annually. Meanwhile, corn starch s share of total starch output has increased from 80.5 percent in 1995 to 91.9 percent in 2005.
Others Sorbitol Currently, China is largely self-sufficient in sorbitol with a small amount of imports. China s sorbital output 435 thousand metric tons in 2005, up 11 percent. and China imported 14 thousand metric tons of sorbital. Citric acid China is the largest citric acid producer and exporter in the world. China produced 600 thousand metric tons of citric acid in 2005
Major Players in the Corn Starch Processing Industry
Projections of China s Corn Supply, Demand and Trade
Downstream Product Processing Capacity and Major Players
Sweeteners Corn Sweetener Processing Capacity by Province (1,000 MT) Shandong Hebei Henan Jilin Heilongjiang Others Capacity 2,410 1,040 450 700 310 1,090 % 40.2 17.3 7.5 11.7 5.2 18.2
Projection of Starch Production China s overall starch output will increase at 10 percent annually over the next decade to 31 million metric tons in 2015, with China s corn starch output also growing at 10 percent annually to 26 million metric tons by 2015. However, the share of corn starch output in total starch is expected to fall from 92 percent in 2005 to 85 percent by 2015 due to the constraint of corn supplies and increasing production of cassava and tuber starches.
Projection of Starch Demand China s domestic starch demand is projected to grow at 11 percent annually to 33 million metric tons by 2015. The demand for corn starch is forecast to reach 26 million metric tons in 2015, growing at 10 percent annually, essentially in balance with output. Over the next ten years, China s domestic starch supply will lag demand growth with the country relying on starch imports to fill the gap. Total starch imports are projected to increase to 1.8 million metric tons by 2015. China is expected to export a small amount of corn starch to its neighboring countries over the next ten years, around 200 thousand metric tons annually.
Supply and Demand Outlook for Corn Starch Industry Demand Outlook for Corn Starch Over the Next Ten Years Demand Outlook for Downstream Products Projection of Starch Processing Demand for Corn
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