China on Thursday increased the forecast for its deficit in corn supply in the 2017/18 crop year to 4.31 million tonnes from the 890,000 tonnes predicted last month, stoked by lower-than expected output and higher anticipated demand. Corn output is expected to drop to 210.1 million tonnes versus last month's forecast of 212.48 million tonnes, the agriculture ministry said, adding that less land had been planted with corn than earlier thought following reduced government support.
Corn consumption will come in at 215.62 million tonnes, compared with last month's forecast of 214.57 million tonnes, thanks to stronger-than-anticipated demand from ethanol plants, the ministry said in its monthly Chinese Agricultural Supply and Demand Estimates (CASDE). Chinese state media announced last month that Beijing plans to roll out blending of ethanol across the country's gasoline supply.
The deficit in supply in the world's top consumer of grains could support prices that have been under pressure from the recently started harvest. Dalian corn futures have lost around 1 percent this week as the harvest in most regions gets underway.
Some farmers plan to hold their crop back from the market, however, betting that prices could rally later in the season. The larger deficit is also good news for Beijing, which has been trying to scale back its production of corn and still needs to get rid of millions of tonnes of ageing corn held in state warehouses after a years-long stockpiling programme. China's crop year for grains runs from October to September.
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