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It Would Bring Limited Influence on Supply and Prices of Corn in the Short Term

China Agriculture Report By CnAgri2018-06-27 16:29:19China Agriculture Report Print Imposing 25% taxes on importing agricultural products from the U.S. would directly lead to an increase of 300 RMB/MT in tax-paid costs of agricultural imports from the U.S., such as corn, sorghum and barley. But, it was predicted that this policy wouldn’t make corn be in a short supply and bring little influence on corn prices. The main reasons are as follows:
(1) The supply of corn in the domestic is mainly from temporarily-stored auctions. By the end of June, more 30 million MT of corn hadn’t been warehoused out, and corn was in an abundant supply.  
(2) Total corn imports won’t reduce obviously. China carries out quota system on corn imports, and tariff-rate quotas are 7.2 million MT. Since 2016, corn imports from Ukraine have taken up more 80% in total corn imports, and the proportion of imports from the U.S. in total imports has decreased obviously. After collection of tariffs on importing agricultural products from the U.S., corn imports from the U.S. would reduce greatly and the imports from other countries would ascend.
(3) The consumption of corn substitutes would go down, but slightly. Among imported corn substitutes, only most of sorghum is from the USA. Along with the growing of sorghum import costs, sorghum replacement for corn in feed would reduce greatly, and corn consumption would go up. But the highest volume of replacement was predicted to be around 500 MT, taking up a limited proportion, so it would bring relatively little influence on corn prices in the near future.
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