February 5, 2021
China's feed producers and grain users keep record corn stockpiles
Corn stockpiles held by China's feed producers and commercial grain users have reached multi-year highs over concerns of crop shortages even after a recent corn harvest, Reuters reported.
Domestic corn prices have increased 50% in 2020 as China's steadily recovers its swine industry, resulting in record corn imports like China's biggest ever United States corn purchase last week.
Many of China's industrial corn users are stockpiling in anticipation of a possible supply tightness. They have continued purchases even after farmers harvested the country's biggest ever corn crops at over 260 million tonnes in January.
Last year, corn stockpiled in state reserves were depleted by government auctions, and domestic production was affected by typhoons.
According to data from the National Food and Strategic Reserves Administration, commercial companies bought 62.79 million tonnes of corn from farmers from the start of the new crop season on October 1 through to January 10. This was higher than the 50.77 million tonnes in the previous year.
A top government official told state media that the corn buying that boosted national commercial grain stocks to 15-year highs, as corn stocks in the northest corn belt up three times compared to last year.
A recent survey released by agriculture consultancy Cofeed of over 200 traders and farmers found that traders are building up corn stockpiles ranging from 2,000 tonnes to 40,000 tonnes in preparation for high prices and tight supplies.
The United States Department of Agriculture (USDA) projected China's corn consumption to surpass production by about 25 million tonnes in the 2020/21 season.
Dalian Commodity Exchange warehouses DCE-CRNWHSTOT saw corn reserves surpass 100,000 tonnes in January 2021 for the first time.
China's corn values have dropped about 5% from record highs in mid-January, but sources have said prices won't sharply drop thanks to healthy demand from the livestock industry.
Hu, a farming supplies dealer in the Henan province, said corn prices won't fall as there is fewer corn, but added that something unpredictable like state intervention could affect prices. State intervention could mean government measures to impact domestic grain prices such as additional grain imports, reserve auctions of other crops, or other measures.