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China Expects Bumper Corn Crop, but Needs Imports

08:57AM Oct 05, 2011

China is harvesting a record-large corn crop, but it's also likely to be in the market to import 5 million to 10 million metric tons of corn by the end of 2012, according to the U.S. Grains Council.

That projection for the next 15 months compares with USDA's estimate that China will import 2 million metric tons of corn in the current marketing year. USDA estimated China's imports in each of the past two years at 1.3 million metric tons, or more than 51 million bushels.
"We know that about 5 million metric tons were listed for sale by USDA to unknown destinations," said Tom Dorr, Grains Council president and chief executive officer, in a news conference call this morning. "We believe a good share of that is China corn." The council calculates that China's corn carryover this year is about 24 million metric tons, more than 10 million tons short of the government's goal.
"So we think an estimate for all their import demand from all markets around the world will be between 5 and 10 million metric tons," said Dorr. That tonnage equals about 200 million to 400 million bushels.

China Crop Tour

The council conducted its 15th annual China corn harvest tour in September. Grain traders, the feed industry, U.S. and Chinese analysts, the U.S. embassy and corn producers were represented on the tour. They took more than 300 samples in seven major corn production areas that account for nearly three-fourths of China's corn crop.
"We determined that China will produce a bumper crop this year, with a production estimate of 167 million metric tons or 6.6 billion bushels," said Kevin Rempp, secretary-treasurer of the Iowa Corn Promotion Board.
Don Hutchens, executive director of the Nebraska Corn Board, noted that 60% to 80% of China's corn is harvested by hand.
"The toughest debate was on planted acres," Hutchens said of the tour group's discussions to develop estimates. "It's very difficult to know from any government statistics what those planted acres might be."
The Grains Council's new crop estimate for China continues an upward trend that has increased output 34% in the past six years. Its estimate is short of the Chinese government's projection of 182 million tons, but both estimates would represent a record high, Dorr said.

Yields about Steady

The council pegs China's average yield at about 86 bu. per acre.
Mike Callahan, the council's senior director of international operations, said yields appear to be holding about steady in recent years.
"These yields don't seem to be going up the way one might expect them to," even though producers are using some new agronomic practices and increasing plant populations, Callahan said.
Dorr noted that China's plantings average about 23,000 plants per acre, generally using older hybrids.

Stocks Declining

If the council's production estimates are correct, China's corn demand will exceed production by about 3.5 million tons, Dorr said.
The Chinese government and USDA have estimated China's corn carryover at 50 million metric tons in recent years. However, the council says private analysts estimate the carryover has slipped from about 48.8 million tons in 2008-09 to 23.8 million tons in 2010-11.
"We believe that their focus is somewhere between 35 million and 40 million metric tons" in carryover, Dorr said. To fill the gap, the council expects China to go to the world's corn exporters for 5 million to 10 million metric tons by the end of 2012. 

China Cautious on Timing

"They are very sensitive to the price signals they send, not just in the context of how it impacts the price, but also how it depicts their role in the global market and the demand for corn," Dorr said when asked about the Grains Council's projection for Chinese imports through 2012 rather than for the marketing year.
"When they're buying corn, they're concerned that it isn't going to drive the price up for the less developed countries," he said. "And they want to make sure they do everything they can to avoid being characterized as...entering into the world market and making it difficult for less resourceful countries to have adequate food supplies."
Chinese buyers are also concerned about whether they will encounter import challenges with genetically modified organism (GMO) events that have not yet been approved in China.
"They tend to monitor and adjust their delivery time frames in ways that accommodate economic, political and supply-demand" considerations, Dorr said.
More information
On its website, the Grains Council has posted: