August 29, 2013
China's 2013 corn output estimates may be lowered on heavy rains
Due to rain and flooding in the northeast that damaged crops, corn output in China may be less than projected this year, according to a local researcher, thus boosting the need for more imports.
Production may fall by about 2.7% from an August 14 estimate to 179 million tonnes, Feng Lichen, general manager of Dalian-based grain advisory company Yigu Information Consulting Ltd., said Tuesday (Aug 27). Feng estimated last year's harvest was 181 million tonnes, lower than China's official figure of 205.6 million tonnes.
A smaller crop may lead to higher imports of the grain used in food and livestock feed, as demand continues to outpace production. Inbound shipments may reach a record seven million tonnes in the 12 months starting October 1, the USDA estimates. China made its first-ever purchase from Ukraine this year, increasing competition with the US, the biggest supplier, and Argentina.
"Too much rain has caused some crops to fail," said Feng. "Domestic supply could easily become tight from a current surplus."
Heavy rains and lower temperatures in the northeast caused flooding and hail damage since August 14, the China National Grain and Oils Information Centre said August 19. The top producing region received as much as 50% more rain than the average in previous years.
Corn for delivery in December on the Chicago Board of Trade rose 1% to US$4.91/bushel at 1:08 p.m. in Beijing. Futures on the Dalian Commodity Exchange were little changed at RMB2,338/tonne (US$382), or US$9.70/bushel.
Dalian prices have slid 3.9% this year on the prospect of record imports and a larger local crop. State reserves hold about 30 million tonnes bought from farmers this year, which has weighed on prices, said Feng.
Low temperatures caused by rains can slow or halt crop development. China, which the USDA estimates will consume about 207 million tonnes this year, has ordered more than four million tonnes of US corn for delivery after September 1, the grain centre said.
"It's looking wet and cold in the northeast, and that adds risks to crops," said Li Qiang, chairman of Shanghai JC Intelligence Co. "Temperatures and early frost in the next month are the key to watch for."
Temperatures in the Jilin province, located in the centre of the northeast, will average 17 degrees Celsius in the next week, lower than the average of 19 degrees in previous years.