The Starch Monster is Hungry

Another article from cngrain.com frets about the competition between industrial processors and feed mills in procuring corn. The demand for corn from both types of users is continuing its rapid growth, putting pressure on corn prices.

The traditional major use for corn is for livestock feed, and there are feed mills and livestock all over the country. During the early part of the 2000s the government promoted factories producing starch, sweeteners, lysine, alcohol, and other chemicals and pharmaceuticals made from corn. At the time China had a huge surplus of corn. Most of these industrial use projects are in Shandong and Jilin Provinces.

The article worries that the industrial use is continuing the rapid pace set in 2009/10 while feed demand increases as well. According to the article, the industrial share of corn use, already high, is increasing.

The government, having created the starch monster last decade when corn was in surplus, is now struggling to rein it in. The government has taken several short-term measures (like telling them not to buy corn in the northeast) to slow demand and reduce the competition with feed use. But the article says the medium- long-term outlook is for continued growth in industrial use of corn.

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