April 21, 2004
Analysis of China's Corn Supply And Demand In April 2004 And Beyond
An eFeedLink Special Report
Below is an abstract of the report: Analysis of China's Corn Supply And Demand In April 2004 And Beyond
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The month of March saw a shift in the demand for and supply of corn in the Chinese market, resulting in a seasonal price hike for corn. In April and beyond, how will the demand/supply relationship in China's corn market change? This report provides an in-depth analysis of the demand and supply situation in China's corn market, as well as price movement of corn, in April and beyond.
I. Wide Gap between Corn Output & Demand
The widening disparity between output and demand, coupled with the declining stockpiles, are the key determinants to influence corn prices in China throughout the rest of 2004. According to February's world edible oil report, China's corn production totaled about 114 million tons in 2003, having fallen consecutively over the preceding four years.
China's falling corn output is accompanied by a sharp drop in stockpiles, which are projected to fall to 19.49 million tons at the end of 2003/2004. Relative to 2002/2003, this represents a fall of 23.50 million tons. The causes: firstly, China's corn production has fallen consecutively over the last four years; secondly, demand for corn in China is slowly growing over the years; thirdly, there has been a sharp drop in the corn stockpiles held by the grain enterprises in China.
II. Regional Disparity between Corn Supply & Demand
Regional disparities in China's supply of and demand for corn are expected in 2004. China's corn-producing regions are mainly concentrated in the three provinces of northeastern China, namely Heilongjiang, Jilin and Liaoning provinces, and the eastern part of Inner Mongolia.
In 2003, corn output totaled 16.4 million tons and 8.304 million tons in Jilin and Heilongjiang respectively, both of which accounted for 21.76% of China's total corn output. Since autumn 2003, China's corn supply has begun to show signs of a shortfall.
This is mainly due to the ever-growing demand for corn by the corn-processing enterprises in corn-producing regions, as well as the fuel ethanol and feed mill industry has led to an overall reduction in the supply of corn by the producing regions. Secondly, a considerable fall in the auction of old grains and corn in the domestic market has resulted in fewer substitutes for corn in animal feed. Thirdly, the supply of corn in the six provinces of the central plains (Henan, Jiangsu, Shandong, Shanxi, Shaanxi) is drying up. Fourthly, with lesser corn procurement by the local government-owned grain enterprises, the holding of most of the corn is decentralized, such that supply are channeled to the market through trade.
More contents in this 3-page report include:
III. Strong Demand; Big Price Fluctuation Seen
IV. Low Rail Transportation Availability
V. Decentralized of Grain Sources
VI. Vigorous Corn Demand in Global Market
VII. Comparative Price Advantage Push Up China's Corn Prices
Conclusion
