October 6, 2010

China to expect higher corn production in 2010

After a shorter crop year in 2009, China is expected to bring in a higher number of corn crop in 2010, according to the US Grains Council (USGC).

The USGC estimates the total production for China's 2010 corn crop at 158 million tonnes (6.2 billion bushels). Given the projected corn harvest area of 30.8 million hectares, this implies a yield of 5.13 tonnes/hectare or 81.5 bushels/acre.

The U.S. Department of Agriculture estimates China's corn production at 166 million tonnes (6.5 billion bushels) with a 40 million ton (1.6 billion bushel) carryover. Shanghai JC Intelligence, an independent consulting firm in China, projects a 158.7 million tonne (6.2 billion bushel) corn crop with a 30-35 million tonne (1.2-1.4 billion bushel) carryover. The Chinese government currently projects 165 million tonnes (6.5 billion bushels) with a 55-60 million tonne (2.2-2.4 billion bushel) carryover.

Last year's production was estimated at 155 million tonnes, but some estimate it may have been as low as 135 million tonnes.

"While the Council is projecting higher production numbers than last year, this does not indicate a bumper crop. Conservative estimates of demand growth suggest China will likely need to import," said Tom Dorr, USGC president and CEO.

Last year China made its first significant imports of US corn over the past several years. In the 2011 calendar year, the USGC anticipates China to import 2 million tonnes (78.7 million bushels) of US corn.

Kevin Latner, USGC director in China, said that DDGS is essentially a free commodity in China because there are no tariff rate quotas that limit imports. This makes DDGS very attractive to China feed users, especially as corn prices have risen both in the US and China.

Over the years, China has exported significant amounts of corn to neighbouring Asian countries. USGC trade policy director Floyd Gaibler explained that China exports dropped off significantly since 2006-07. The current projection is that China will export less than 170,000 tonnes. There is significant growth in Southeast Asia, particularly Singapore, Vietnam, and Malaysia. All these countries show a potential opportunity for increased US corn imports due to the lack of China's exports.

China's demand growth is expected to continue. Dorr said the demand for feed continues to grow at rates of 3-5% each year.

"China has imported significant amounts of soy, DDGS and now corn. The Council believes this reflects a recognition by Chinese government officials that food security does not necessarily have to be built on food self sufficiency," Dorr said.

He also added that the Council is looking to apply lessons learned in China and transfer that same market growth and demand into other growing countries such as India.