China’s corn crop could grow
Widespread flooding in China this summer is thought to have damaged parts of that country’s corn and soybean crops. But a grains and oilseeds analyst for Rabobank, says the global lender’s Beijing staff is raising its estimate of the size of this year’s Chinese corn crop.
“They believe it is at or above the trend this year,” said Sterling Liddell, a Rabobank analyst based at the Rabo Agrifinance office in St. Louis. Rabobank, a Dutch lender that ranks in the top 25 global banks, has analysts based in all of the world’s major agricultural regions.
Liddell told Agriculture.com Tuesday that Rabobank estimates of the Chinese corn crop are in line with those of China’s National Grain and Oils Information Center. It currently estimates the crop size at 168 million metric tons (or 6.5 billion bushels).
That’s about 2 mmt above USDA’s estimate in its August WASDE (World Agricultural Supply and Demand Estimates).
That small percentage shift in the Chinese corn crop may not sound like much, but many commodity traders and analysts expect China to import between 1mmt and 2mmt of corn from the U.S. this year and the market has taken China’s first U.S. corn imports since 1994 as a signal that the world’s second biggest economy may soon open up to more imports of corn.
Unlike soybeans imports, which are approaching four times the size of China’s domestic bean crop, corn and other feed grain imports are more restricted by the Chinese government.
China has a policy of limiting feed grain imports to 5% of its own production, Liddell says.
One skeptic about the potential for continuing big exports is Fred Gale, an economist at USDA’s Economic Research Service who has studied household food consumption in China and who visits that nation about twice a year.
“If China has a big harvest this fall, the imports may be cut off,” Gale told Agriculture.com recently. “It could drop off to nothing after October. That’s the usual pattern.”
In the long run, though, many believe China will have a tougher time limiting imports.
Liddell says Rabobank’s Beijing office has looked at satellite images of the amount of farmland in China and it may be shrinking faster that the government wants. China carefully controls commercial development in an effort to preserve farmland.
Liddell said that illegal commercial conversion of farmland leads one Beijing Rabobank grains analyst to believe that China now has less than 120 million hectares of arable land. That 120 million hectars (or 296.5 million acres) is the minimum that Chinese leaders believe is needed to maintain its goal of 95% self sufficiency in grains, Liddell said.
The next USDA estimate of China’s 2010 corn crop will be out in the September 10 WASDE report.