China's corn needs to exceed harvest by 14m tonnes

A strong start to 2013-14 for Chinese imports of US corn may fizzle out provided the domestic harvest lives up to early promise, and the country proves willing to delve into its huge inventories.

The US Department of Agriculture's Beijing bureau quoted trade sources as saying that "China has already contracted approximately 1m tonnes of US corn for September 2013 delivery".

That figure is well above the number of 365,700 tonnes which the USDA has officially recorded for US corn sold to China so far in advance for the whole of 2013-14.

However, the strong start to Chinese imports next season looks like facing a sharp slowdown, with the USDA bureau estimating buy-ins from all origins over 2013-14 at 4.0m tonnes.

That is well below the 6.8m tonnes that USDA officials in Washington outlined in long-term projections released in February.

Corn vs soybeans

The bureau's forecasts assume a 2.0m-tonne rise to a record 210.0m tonnes in production, boosted by higher sowings, lifted by expectations of higher returns compared with the likes of soybeans and pulses.

"State media reported that key grain producing provinces plan to increase overall grain production by encouraging crops with higher yield potential," the USDA's Beijing bureau said.

In the important north-eastern corn-growing state of Heilongjiang, officials "want to expand corn and rice acreage at the expense of soybeans", setting a corn acreage target of 100m mu, equivalent to 6.6m hectares, and representing an 11% rise year on year.

While there have been some concerns over wet weather and snow slowing plantings, which have yet to begin in the north east, "it is unclear if this will have an effect".

Stocks drawdown

Nonetheless output at that level, or even the higher figures of 213m tonnes from Informa Economics and 216m tonnes from Lanworth, would be insufficient to cover demand.

The bureau pegged China's corn consumption in 2013-14 at 24.0m tonnes, factoring in a slowdown in the rate of growth to 8.2%, from 10.1% in the current season, as economic growth eases.

The shortfall between output and consumption will be met by eating some 10m tonnes into inventories rather than hiking imports, the bureau spreadsheet assumes.

China's inventories are forecast to end 2012-13 at a 10-year high of 63.3m tonnes.

Source: http://www.agrimoney.com/news/chinas-corn-needs-to-exceed-harvest-by-14m-tonnes--5691.html

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