Corn imports seen to reach 800k MT

MANILA, Philippines — The Philippines is projected to import 800,000 metric tons (MT) of corn until the middle of the year due to low domestic production coupled by higher feed demand, according to the United States Department of Agriculture (USDA).

In its latest Grain: World Markets and Trade report, the USDA said the projected corn importation is the second highest on record.

The agency projected  corn imports to reach 700,000 MT until mid-year in its December report.

The USDA said  the country’s meat consumption has increased since pandemic restrictions were lifted in the middle of last year, and this drove demand for corn to produce animal feeds.

Corn is a major ingredient in making feeds for the livestock and poultry industry.

“The last pandemic restrictions were lifted in the second half of 2022, resulting in a return to pre-pandemic meat consumption patterns by consumers as holidays, school, and workers resumed in-person activities,” the US agency said.

Meanwhile, domestic supply cannot keep up with the growing demand for corn as production is affected by high fertilizer prices.

“While high global corn prices in the summer of 2022 pushed farmgate prices to attractive levels, the increased cost of inputs such as fertilizer made corn less favorable than other crops for domestic production,” the USDA said.

For this year, the Department of Agriculture (DA) forecasts a yellow corn deficit of 2.8 million MT, which is equivalent to 34.7 percent of yellow corn demand and to almost 125 days of feed requirements.

In his recent presentation to the President, Finance Secretary Benjamin Diokno said this shortfall needs to be addressed “through temporary and timely importations to avoid affecting the production of other industries such as hog and poultry.”

However, higher corn imports should not happen this year due to substitution, Philippine Maize Federation Inc. president Roger Navarro   said.

“The issue on corn deficit is already addressed by feed wheat importation as corn substitute,” he said in a text message.

Currently, corn does not benefit from domestic support programs compared to other Philippine staples such as rice, further increasing risk, the USDA said.

To help remedy the situation, the Philippines lowered tariff rates for corn imports in July last year and extended this low tariff regime until the end of this year.

This will allow importers to enjoy in-quota tariffs of five percent before it reverts back to 35 percent next year.

“As a result, foreign supplies became price-competitive with domestic supplies. Per (Foreign Agricultural Service) FAS/Manila, in November, farmgate prices for domestic corn were $330 per ton, while imports from ASEAN partners such as Burma averaged $317 per ton in the same month,” the USDA said.

Meanwhile, non-ASEAN partners such as Brazil benefitted the most, with prices averaging $297 per ton in November, the US agency said.

The report also said the rising corn imports also reflect changes in the market for feed substitutes.

“In 2021/22, feed demand was met by substituting corn with Australian barley due to low cost. Prices for Australian barley have risen from $275 per ton in November 2021 to more than $317 per ton in November 2022. The higher cost of barley in 2022 has pushed buyers towards larger corn imports,” the USDA said.