Corn harvest may push
China to use its stocks
MICHELE F. MIHALJEVICH
D.C. — Despite projections of a drop in corn production,
China probably will be able to replenish those losses
from stock already on hand, according to a report from
the U.S. Grains Council (USGC).
with the USGC toured China in September to look at corn
area planted, yield and production. Their report was
released Sept. 28. This is the 10th year for the Chinese
production is expected to be 148.79 million metric tons
(MMT), or about 5.86 billion bushels, said Cary Sifferath,
USGC senior director in China. Last year, the country’s
corn growers produced 165.92 MMT, or about 6.53 billion
“China has experienced drought conditions, especially
in the northeast section,” he said. “We’re currently
seeing some fairly high corn prices in China.”
projected corn yield is about 79 bushels an acre, he
said, also down from last year.
expected to import corn to make up for potential shortfalls
in the corn crop, Sifferath said.
fairly large amounts of corn stock on hand, and probably
will continue to have enough corn to meet their needs,”
he said. “Right now, I don’t think they will see corn
imports, at least in the short term.”
won’t export much corn either, despite rumors the country
is offering export subsidies, Sifferath said. “From
what I understand, even with subsidies, Chinese corn
would not be competitive,” he said. “Nothing has really
moved because it’s too expensive, even with the government
per bushel of corn in China ranges from the equivalent
of $5.58 to $6.96, depending on factors such as location,
China might be selling some of its corn reserves domestically
but will not be exporting corn this year, said David
Kohli, commodity representative with Allendale Inc.,
of Fort Wayne, Ind. Because of the drought and potential
damage to its crop, China could eventually become a
buyer on the world market, Kohli said.
bought 3,000 metric tons from Taiwan, and could eventually
be looking at other Asian countries for more,” he said.
“I definitely see the potential for China buying corn
from the U.S., but we’d be a last resort. They’d buy
from their Asian partners first.”
If China opts to purchase corn from the United States,
Kohli said he doesn’t see it happening before the first
of the year.
If the projections
are correct and China’s corn crop ends up below 150
MMT, it would be the country’s smallest crop since 2003,
said Shawn Hackett, president of Hackett Financial Advisors,
“They would have to start eating from their reserves,
and then they would start to buy because they’d be worried
about not having a reserve,” he said. “They would use
the reserve in part to try to keep prices from escalating
say, ‘Our crop’s not that bad,’ to keep the market from
running away. If they buy, they’ll probably start buying
quietly to not attract attention. They wouldn‘t want
to tip their hand.”
market may sense something is about to happen because
of China’s projected smaller crop, Hackett said.
isn’t going down, and it may know, or may be realizing,
something isn’t right over there. If they have the crop
they say they have, and if we have the crop we say we
have, there’s no justification for $3.30 corn,” he added.
participation in foreign corn markets is uncertain,
what is certain is the country is buying large amounts
of dried distillers grains with solubles (DDGS) from
the U.S., Sifferath said. Last year, China bought about
8,000 metric tons of DDGS, and this year, purchases
are projected to be in the 250,000-300,000 metric tons
opportunities here for U.S. field grain producers,”
he said. “In June and July we started to see very rapid
imports of DDGS from the United States.”
imported by larger feed companies and trade companies
in China and used in poultry and some dairy rations
in the coastal areas, Sifferath said. In the last few
months, swine and other livestock industries have started
product tends to be a superior quality, and is cheaper
than domestic DDGS in many cases. China does have some
domestic DDGS available but they tend to be a different
product,” he said.
corn tour also gives U.S. farmers a chance to observe
Chinese farming techniques. This year, Guy Davenport,
a corn grower from North Carolina, participated in the
what I expected or envisioned,“ he said. “Each farmer
has about five acres and there’s a lot of hand planting.
Because of that, there are inconsistent planting distances.“
little evidence of disease, but Chinese farmers don’t
always take advantage of technology that U.S. farmers
use regularly, he said.
take soil samples. They just applied whatever their
neighbors did. But this does give us a better idea and
better perspective on how much corn can be grown in
that part of the world,” Davenport added.