April 26, 2007

China's corn output seen higher in 2007
 

China's corn yield is expected to be down this year but output would be higher due to increased planting areas, according to a spokesman from China's National Grain and Oils Information Centre (CNGOI).

China's corn planting area is seen to increase 3.6 percent during the March to April period, Wang Xiaohui, an spokesman of CNGOI said at China's Dalian Exchange Agriculture Products Spring International Forum.

Wang said corn planting areas have been growing rapidly for four straight years at the expense of soy and spring wheat planting. However, corn yields were lower in 2006 than in 2005.
 

In the past four years, wheat and corn yields have risen and yields of some crops have reached historically high levels.

Based on China's agricultural cycles of "two years flat with one year-decline and one-year bumper crop output", production faces a possible threat this year. 

At the same time, corn yields might also be affected. However, corn output is still likely to increase due to increased planting areas this year.
 

Wang said 2007/2008 should see a generally balanced market for supply and demand. However, this would hinge on demand for feed production, he added.

Feed consumption has been growing for the past 25 years until last year, when it fell.

For 2007 and 2008, the increase in feed consumption would be about 3 million tonnes while industrial usage would grow 2 million tonnes, he said. Growth in industrial usage would be far below this year's expectations. 

China's industrial corn consumption has grown for 25 percent a year on average for the past 5 years. This was especially so in 2006, when rapid growth in industrial corn consumption exerted a great influence on domestic corn prices.

The combined rising demand from processing industries, exporters and ethanol consumption is causing corn prices to remain at high levels.

However, prices would come under intense pressure as new corn supplies in greater quantities arrive in the near future.