USGC: China’s Severe Drought Leaves Room For Speculation

The second-largest corn producing country, China, is reportedly suffering from severe drought conditions in areas of their corn producing regions, Ag Professional reports. As a result, China’s feed grains production is projected to decline, minimizing their competitiveness in export markets and allowing speculation about the likelihood of imports.

The official corn production number for the 2009/2010 crop year from China’s National Grains and Oils Information Center’s September report was 165.5 million metric tons (6.5 billion bushels), down approximately 1 million tons (3.9 million bushels) from their August report. In USDA’s World Agricultural Supply and Demand Estimates released Aug. 12, China’s corn production was projected at 162.5 million tons (6.4 billion bushels).

According to Cary Sifferath, U.S. Grains Council (USGC) senior director in China, Chinese corn is currently priced too high to compete in export markets. China’s corn prices are currently isolated from the rest of the world due to no imports or exports, pushing prices higher than the world average. China exported 5.27 million tons (207.5 million bushels) of corn during the 2006-2007 crop year. Since then, there have only been minimal corn exports. Based on China’s expected drop in corn production, it is unlikely significant quantities of corn will be exported during the 2009-2010 crop year.

Whether or not China will import corn is anybody’s guess, according to Sifferath, but the U.S. will be the likely origin if the time comes.

The accuracy of China’s corn production projections are often questioned, giving USGC reason to conduct corn production tours, which are currently taking place in the Northern China Plain regions of Henan, Anhui, Hebei and Shandong Provinces, the Council said.