Current Marketing Thoughts
Kevin Van Trump
Kevin Van Trump has over 20 years of experience in the grain and livestock industry.
ATTENTION! China's Corn Production Growing
Nov 03, 2011
Production numbers out of China are showing another record corn crop. From what seems to be circulating, it looks as if they have jumped from just over 177 million metric tons produced last year, to just over 189 million metric tons produced this year, according to some private estimates. For what it is worth the USDA had their production estimated at 182 million tons. The point is, even though the Chinese numbers may be a stretch, you can't rule out the possibility that the USDA could add to their 182 million estimate just to be safe. For the Chinese this would essentially be their seventh "record crop" in the past eight years. This time around it seems somewhat legitimate though as I have heard from good sources they planted about 6% more corn acreage in 2010, and look to be adding another 5% in 2011. Let's not forget they also had fewer weather related production hiccups than they had the previous year. I have certainly never been one to buy into the Chinese bookkeeping, but I am afraid this time they may be throwing out numbers that are somewhat in the ballpark. I am not suggesting that we panic, because I truly believe they have a corn shortage issue brewing and have finally reached the tipping point where they can no longer support their own domestic demand. Sources I have spoke with say their is still an urgent and pressing need to continue expanding corn acres to help accommodate demand being created by the expansion of hogs, beef and dairy operations. My real fear is the "technological" gains they may soon start to realize. Remember, while here in the US, most corn is grown on farms averaging 250 acres, in China most of the corn is grown on farms averaging about 2 acres in size, and is planted and harvested by hand. To give you a real understanding, consider the fact that "big farm operations" in China actually doubled this year, meaning that farmers with more than 20 acres actually jumped from 2% to 4% for those raising corn. I want to make sure you realize that even though China is not too far behind the US in total corn acres planted, they are way behind the US in total corn produced. From what I hear it is believed their average corn yield is about half of what the US producers have been seeing. To be specific I continue to hear their average yield is right around 85 bushels per acre. Most are using older-single cross hybrids, their pesticide controls and sprays are less than adequate, irrigation is poor, planting and harvesting can be extremely time consuming and leaves them exposed to weather related risk, etc... My point is, yes, they have tremendous "demand," but let's not forget they also have big potential to produce more "supply!"
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