China will consume more corn in 2016/17 than previously forecast as demand for the grain in livestock feed will rise after China slapped anti-dumping duties on US distiller's dried grains, an influential report said on Wednesday, pushing up prices. In a daily report, the China's National Grain and Oils Information Center (CNGOIC), an official think-tank, raised its estimate for corn consumption for the 2016/17 season to end-September to 197.6 million tonnes, up 21 million tonnes from the 2015/16 year.
The forecast is up by 500,000 tonnes from a previous estimate made in January. The report reinforced an increasingly bullish view on the outlook for corn, spurring renewed buying in futures and extending a months-long rally amid hopes that better-than-expected demand this year will help erode a corn stockpile.
On Wednesday, Reuters reported that Beijing is urging regional authorities in the nation's top four corn producing regions to offer subsidies to livestock feed companies, the latest move to boost consumption of a bumper crop.
After dipping into negative territory on Wednesday morning, the most-active May futures contract closed up 0.5 percent at 1,602 yuan ($232.68) per tonne.
"The report had some impact on the market especially when right now the market is very conflicted," said Zhu Gang, a manager at the asset management division of Shanghai Zhongqi Futures. "Any good news would cause a stir. Still, given the large inventory, the increased demand would not change the market fundamentally." China in January increased punitive tariffs on imports of US distillers' dried grains, a byproduct of corn-based ethanol, in a win for China's fledgling ethanol industry.
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