According to the USDA, China is using more of its corn to manufacture hundreds of industrial products, including starches, sweeteners, alcohol, amino acids and citric acid. Chinese analysts estimate that industrial use may have reached 1.8 billion bushels in 2007-08, about a fourth of the country’s corn use. Only the United States uses more corn for industrial processing.
Despite a decade of booming industrial use, China’s corn supply still exceeds its demand.

The rising cost of corn in China could dampen growth in corn-based industrial processing. China’s corn prices are generally 20 to 40 percent higher than U.S. prices. (Ocean freight costs and taxes prevent imported corn from being price-competitive at the Chinese border.)

To bolster farm incomes and maintain incentives to plant grain, Chinese policy makers are now setting minimum purchase prices for corn and other grains that are tied to rising production costs. During 2008-09, the minimum price encouraged farmers to plant corn. However, many Chinese corn processors cut back operations because they had to pay high prices for corn while starch and alcohol prices were falling.

For the 2009 crop, China’s government had to offer companies subsidies to process surplus corn from state-owned warehouses. If China’s policies keep ratcheting corn prices upward and the gap between Chinese and U.S. corn prices widens, the boom in China’s industrial processing may cool off.
We would assume that could affect China’s livestock-based grain purchases.