Chinese farmers to expand corn areas due to high state prices

Chinese farmers could expand corn acreage by 3 percent this year to take advantage of high prices offered by the state stockpiler, industry analysts said, a move that would put further pressure on Beijing to reduce its massive corn stocks. A stockpiling scheme aimed at supporting farmers has pushed domestic corn prices more than 30 percent higher than global prices, encouraging growers to boost output.
Beijing has stockpiled more than 82 million tonnes from the 2014/15 harvest and state reserves now hold a record 150 million tonnes, more than eight months' consumption. Auctions aimed at bringing the stockpiles down have not gone well because of high state-set prices and weak demand for feed.
Corn seed from Germany's KWS SAAT AG is so popular in the top corn province, Heilongjiang in the north-east that seed prices have doubled as farmers prepare for sowing this month, seed companies and farmers told state media.
"We are unprepared for such a boom in demand. Because of good returns last year, farmers are choosing to grow more of the early-maturing variety instead of soy, which gives a lower return," Zhang Haiquan, chief representative at KWS's Beijing office, told Reuters, referring to the Demeiya seed that grows in the cold far north, previously only suited to soybeans.
Zhang estimated KWS's corn seed sales this year could increase by between 10 and 20 percent.
Analysts say Heilongjiang, also the country's top soy grower, may reduce acreage under soy by 30 percent this year as farmers shift to corn.
"Farmers in the north are also increasing corn acreage in place of cotton, in some areas by as much as 20 percent," said one industry source, mentioning parts of Shandong and Henan, which used to be the country's major cotton areas.
Initial estimates by Shanghai JC Intelligence Co Ltd and Beijing Orient Agri-business Consultant Co Ltd put corn acreage growth at 3 percent.
China's cotton acreage could fall by 20 percent this year after a change in government policy led to lower subsidies for many growers last year, according to an official survey.
If the increase in acreage pushes corn reserves even higher, the government may clamp down on cheap imports of corn and corn substitutes.