Concerns are growing in the global grain trade over whether China will limit imports of barley and sorghum in an effort to divert buyers to local corn, according to a food and agriculture analyst.

The United States Department of Agriculture estimates China’s domestic stocks this year at 81.46 million tonnes, while the United Nations Food and Agriculture Organisation’s figure sits higher at 95.4 million tonnes.

The stockpile has amassed because China maintains a floor price for corn, to encourage local production (along with other strategic grains like wheat and rice), while also controlling imports with quotas and production targets.

The policy is one of the reasons Australian exports of barley and sorghum to China have soared in recent years.

Over the past five years Australian barley exports to China have grown by 82 per cent, while sorghum exports have soared by just over 2000 per cent.

Food and agriculture market intelligence firm, China Ag’s, director Loren Puette, says exporters of corn substitutes are now wondering if the peak has already been reached.

“I have spoken with malt barley producers in Australia and they are concerned about how long the growth in demand will continue,” Mr Puette said.

“This growth has been great, but now there is concern about when the plateau will be reached.”

The concern has been stoked by agencies like the US Department of Agriculture and the International Grains Council (IGC), two agencies that have warned China’s policies around imports of corn substitutes could change in the future.

“Purchases could potentially be affected by changes to import policies; this follows reports that sorghum imports could potentially be affected by changes to tighter controls,” the IGC said in its latest report.

Mr Puette said the current situation highlights the sensitivities involved with exporting to China.

“Grains hold such importance for food security within China and when shipments do get shut down for contamination, the information that comes out of China has not always been forthcoming, sometimes it can be cryptic, and you don’t find out what actually happened until months down the line.

“There’s asymmetry in the market place, so exporters in Australia don’t have clear indicators on where demand is heading from China, which is somewhat unfortunate.”

James Cook University professor Zhangyue Zhou, an expert on Asian agricultural markets, says there’s a clear need for the Chinese government to improve of its data.

“If people could help the Chinese government understand that regularly publishing information about its stocks is good for itself, but also for the rest of the world, it would be mutually beneficial,” Professor Zhangyue said.

Source:http://www.abc.net.au/news/2015-09-30/chinese-corn-stockpile-blows-out/6812122