The US Grains Council forecast a nearly 10 percent drop in Chinese corn production in 2009 due to drought in some areas, but said government stocks of corn were currently sufficient to meet the country's needs. Corn prices have been rising in some parts of China due to localised shortages, but imports from the United States remain unlikely in the near term, USGC said on Monday.
USGC projected China's 2009 corn crop currently being harvested at 148.79 million tonnes after an annual crop tour of farms in the world's second largest corn producing country. The USGC estimate was below the US Agriculture Department's latest forecast for 160.0 million tonnes, and China's National Grains and Oils Information Center (CNGOIC) September estimate of 165.5 million tonnes.
China's largest grain trader and corn processor COFCO last week forecast the crop at 148 million tonnes. The USGC said its estimate was down 9.7 percent from CNGOIC's final 2008 production estimate. China's national average yield was calculated at 4.96 tonnes per hectare, or about 79 bushels per acre.
"China has experienced some drought conditions in parts of their corn growing area, especially up in the north-east China section," said Cary Sifferath, USGC Senior Director in China. "Right now, they will probably continue to meet their needs even with the short crop this year. But with that, we will still see some fairly high corn prices," he said.
Government and private forecasters have been scaling back their production forecasts due to the drought and there has been some speculation that rising domestic prices may prompt some Chinese processors to consider importing corn.
China harvested a bumper crop last year, but a massive state stockpiling program aimed at propping up farm incomes has exhausted corn stocks in some areas. As a result, some commercial buyers have had to ship corn long distances, sometimes inconvenienced by bottlenecks on congested railways. But while imports may look attractive on paper, most trade experts have said imports remain unlikely.
"In the short term, I don't think we'll see them importing any corn. They still have fairly large corn stocks on hand," Sifferath said, referring to the government grain reserve which is being steadily released to the market via weekly auction.
Importers may be discouraged by China's tough policy on imports of some unapproved genetically modified corn grown in the United States. Also, import quotas held by private trading companies will expire by the end of September and new quotas may not be issued until January. Quotas held by state trading companies will likely go unused.
"As we get to next spring and summer, if we see the (supply) situation tighten up and prices continue to increase, it's possible we could see them import corn at that time," Sifferath said. High prices for corn and other feed ingredients are increasing demand for US dried distillers grains with solubles, or DDGS, by the livestock feeding industry in China.
"Those high prices have led to some opportunities for some US feed grain products, specifically the distillers dried grains," Sifferath said. He forecast DDGS imports at 250,000 to 300,000 tonnes in 2009, up sharply from only 8,000 tonnes in 2008, and said demand should remain strong into 2010.
Comments
Comments are closed.