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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 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 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 hectares (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.



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