October 15, 2009

China's official grain think-tank has lowered its forecast for the country's corn output in 2009 to 163 million tonnes, a drop of 1.8 percent compared to last year, due to severe drought in the major growing regions in the northeast.

The adjusted figure, which fell 2.5 million tonnes from last month's estimate, was still higher than estimates by the US Department of Agriculture and other industry bodies that put it at 160 million tonnes or below.

According to China National Grain and Oils Information Centre (CNGOIC), the northeast areas will see a decrease in output while the northern provinces will produce more than last year.

Analysts said the low output might prompt Beijing to stockpile a smaller amount of corn this year while the Chinese government might also raise this year's purchase prices. Last year, the government stockpiled a record 36 million tonnes at RMB1,500 (US$219.7) per tonne after garnering the highest ever harvest.

Meanwhile, an analyst with the centre said the frost damage to soy crops was minor. CNGOIC kept its forecast of soy output unchanged from last month's estimate of 14.5 million tonnes, which was 6.7 percent lower than last year.