July 19, 2004

China May Have 3 Million Ton Corn Shortfall In 2005

China's corn supply will fall 3 million tons short of demand in the marketing year that starts Sept. 31, which will lead to a decline in inventories of the grain, the government said.

China's corn output this year may rise 3 percent to 120 million metric tons while domestic consumption will likely rise 5 percent to 123 million tons, Wang Xiaohui, analyst at the China National Grain & Oils Information Center, a State Grain Administration affiliate, said at a conference in Beijing.

"Corn inventories will have to be drawn down to cover the shortfall, which will keep the market in balance in the coming marketing year,'' Wang said.

China's rapidly growing economy, which expanded 9.6 percent in the second quarter, needs more corn for livestock feed and for processing into starch, sweeteners and ethyl alcohol, cutting the country's exports of the grain even as output rises.

The country's 2004 corn exports will likely fall to as little as 3 million tons, down from 16 million tons in 2003, according to a February forecast by the grain administration.