June 27, 2011

 

Chinese farmers to abandon soy amid corn price hikes

 

 

The corn planting area in China's biggest corn production base rose 6.69% in 2011, as farmers take advantage of the higher profit in growing corn than soy.

 

The corn acreage in Liaoning, Jilin, and Heilongjiang increased 2.82%, 3.36%, and 10.72% respectively over the last year, according to an industry portal.

 

Meanwhile, the soy acreage in Heilongjiang Province is estimated to slump more than 20%, according to surveys by the Dalian Commodity Exchange.

 

Heilongjiang is the country's biggest soy production base, yielding about 40% of the nation's total soy output. It produced 5.85 million tonnes of soy in 2010, down 70,000 tonnes or 1.2% from the previous year.

 

The majority of farmers interviewed by the portal are optimistic about this year's corn prices, expecting the purchase prices to rise to RMB1.8-2 (US$0.28-0.31)/kilogramme.

 

However, analysts predict that corn prices are unlikely to rise sharply as the gap between supply and demand is expected to narrow on increasing reserves held by feed mills and the China Grain Reserves Corporation (CGRC).

 

CGRC has resumed corn purchases this year and its corn reserves are predicted to rise to more than 10 million tonnes.

 

The supply and demand of corn will be clear around October, when the new corn arrives on the market.

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