March 15, 2011

 

USDA revises down China's wheat damage

Drought is expected to cut China's wheat crop by 4% to 110 tonnes this season, the USDA said late Friday (Mar 11), undercutting the government's estimate of 115.1 million tonnes.

 

The USDA's Beijing attache remained positive that the lack of water during planting would have only a limited impact on the 2011-12 season, pegging production up 1.8% at 112 million tonnes.

 

"Damage from the recent drought will be minimal, but will produce less than average yields," it said in a report.

 

Wheat prices jumped to a 30-month high last month after the UN issued a warning over drought in China's northern plains - which accounts for 80% of the country's winter wheat area.

 

But prices have pulled back more than 20% as prospects for the coming Northern Hemisphere wheat crop have improved, dampening concerns that China may need to import large quantities of wheat this year.

 

The USDA estimates that in 2010-11 and 2011-12, the country will need to import only 800,000 tonnes of wheat, down 43% from last season.

 

China's corn crop is also expected to emerge unscathed from the drought, with output this year expected to total 162 million tonnes. The USDA downgraded its estimate for 2009-10 by six million tonnes, meaning 2010-11 is up 6.5% on the year.

 

Feed consumption of corn is expected to grow by 2% this season as livestock herds increase. Although high prices mean farmers may substitute rice and wheat for corn, the country is still expected to import 1.5 million tonnes in 2010-11 and 2.5 million tonnes in 2011-12 later in 2011.

 

Corn ending stocks are pegged at 46.6 million tonnes this season, and are expected to fall to 43.9 million tonnes by the end of 2011-12.

 

"With a rising livestock population and continued consolidation in the livestock industry, China's feed demand is expected to continue to put pressure on domestic production and overall grain supplies," the report said.