November 8, 2004

China's 2004 Corn Output to Increase 5.3% to 122 Million MT

China is expected to harvest 122 million metric tons of corn in 2004, increasing 5.3% over last year, according to state media on Friday.

Domestic corn supply can largely meet demand compared with other grains, reported the official Xinhua News Agency.

However, the deficit between domestic corn production and demand is estimated at 7.5 million tons in the 2004-05 marketing year, the report said, citing China National Grain and Oils Information Center, a research unit affiliated with the State Grain Bureau.

The corn price is expected to be stable and even show a lower trend due to an expected bumper crop worldwide.

Compared with anticipated shortfalls in rice, wheat and soybean production, the shortfall in corn is expected to be the smallest, according to the report. Estimates for shortfalls in the other crops were not provided.

China's grain production has been decreasing over the past five years, mainly attributed to low prices and reduced acreage. But demand for grains has been steadily growing as a result of rising incomes and rapid economic development.

The government has drawn down its grain reserves continuously to fill the shortfalls in supply, which had prompted a run-up in grain prices late last year. The government does not release data on grain reserves to the public.

Government incentives to encourage grain production were implemented earlier this year. The schemes seem to have worked, with several reports of projected higher output.

In addition, China slowed its grain exports this year. In the first nine months, it exported only 1.9 million tons of corn, falling 82.4% over the same period last year. Rice exports dropped 58.5% in the same period to 777,112 tons, while wheat shipments fell 50.9% to 658,731 tons.

China also imported near 5 million tons of wheat in the first nine months, up sharply over last year.