Aug 1, 2014
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Current Marketing Thoughts

RSS By: Kevin Van Trump, AgWeb.com

Kevin Van Trump has over 20 years of experience in the grain and livestock industry.

You Have To Believe China Has A Significant Corn Problem

Mar 08, 2011

 This weekend Chinese officials came out with news that they have ample supplies of wheat, supposedly 40 million metric tons more than we had thought.  I think we need to dive a little deeper into their rhetoric.  Look at it like this: they claim they have 100 million tons of wheat on hand, more than one year's worth of supplies.  Yet they follow that comment up with their overall grain reserves at around 40% of their annual national consumption.  You have to believe this insinuates they have much lower inventories in crops other than wheat.  Remember, China typically includes corn, wheat, rice and soybeans into their "grain" comments.  To even further confirm my thoughts you now have several senior grain executives in China calling for curbs to be placed on corn exports and all industrial use of the corn crop.  They continue to stress that corn should no longer be used for ethanol and should now only be used for animal feed.  Those in charge are also desperately trying to make a shift to more corn acres.  For me it all ads up to one thing...China knows they are short corn in a big kind of way.  I am sure they will try and plant their way out of it, but if they encounter any type of weather problems they could be in a huge pinch.  You have to believe they tipped their hand last year when they were forced to import corn from the US for the first time in several years.  Now they can't get farmers to sell their stored inventory and inflation is surging higher, all adding up to big problems for China if any type of production glitch occurs.   

 

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