The U.S. ag attache in China projects the country's wheat production in 2013-14 at 118 MMT, down from 120.6 MMT in 2012-13, but it sees corn production rising 2 MMT from this year to 210 MMT in 2013-14. The attache expects corn imports will rise 1 MMT in the upcoming marketing year to 4 MMT, while wheat imports are seen declining by 1 MMT to 2 MMT. The attache says while government grain support policies will continue to expand, limited arable land, water and other resources will hinder further Chinese grain production.
The attache expects livestock farmers to use less wheat in 2013-14, while corn imports are expected to climb on "strong feed and industrial demand" and expectations for more competitive prices. Furthermore, the attache states, "Due to expectations of higher international wheat prices and relatively more competitive domestic corn prices, trade sources believe that the Chinese government is unlikely to issue any additional wheat import quotas for feed use." He adds, "Trade sources believe that China has already contracted approximately 1 MMT of U.S. corn for September 2013 delivery."
The attache further states, "In calendar year (CY) 2013, the livestock industry may further consolidate because of government incentives, such as recent announcements to offer more insurance subsidies and tax incentives for larger scale farms. In addition, rising feed and labor costs may also encourage smaller producers to exit the industry, as tighter profit margins may eventually become untenable. Current hog prices are very low, and industry contacts note if prolonged may further incite exodus by backyard livestock producers. Pork industry contacts estimate that in CY 2012 corn prices increased five percent, while soybean meal and rice bran prices climbed more than 10 percent."