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China to Cut Corn Acreage by 9% by 2020, Agriculture Minister

By Dominique Patton

BEIJING, Aug 1 (Reuters) - China, the world's second-biggest corn consumer, will reduce planted acreage for the grain by 3.3 million hectares or 9 percent by 2020, said a top agriculture official, a cut seen as unlikely to significantly dent the country's huge oversupply.

Beijing's attempt to bring supply in line with demand is being closely watched by overseas markets, which also face a glut that pushed U.S. prices to their lowest in almost two years in the second half of last month.

"By 2020, corn acreage should stabilise at 500 million mu (33.3 million hectares or 82.3 million acres), down by 50 million mu," said agriculture minister Han Changfu at a meeting in north-eastern Jilin province over the weekend.

(A copy of Han's speech was published on the agriculture ministry's website.)

China is seeking to adjust its crop structure because years of state support for farmers led to a jump in corn output far beyond market demand, saddling the government with huge stocks.

China halted its state stockpiling scheme this year, and Beijing is urging farmers to grow alternative crops such as soybeans or silage crops.

The agriculture ministry had earlier estimated corn acreage would drop by 1.33 million hectares this year but the reduction is now estimated at 2 million hectares, according to a report on the meeting by state broadcaster China National Radio (CNR).

However, achieving ongoing reduction could be difficult, Han warned, according to the radio report.

"This year the change in corn structure has started well but it faces certain difficulties," Han said.

Farmers may be unwilling to change their growing habits, and if the prices of alternative crops are not as good as corn, farmers could switch back, he said.

Analysts said the 2020 target for acreage reduction should be greater to make more of an impact on China's corn glut.

"We believe acreage should drop by more than that, especially in 2017, to achieve a significant reduction in supply. That's the only way to get a strong cut in stocks," said Cherry Zhang, analyst at Shanghai JC Intelligence.

China has an estimated 240 million tonnes in state reserves, and is expected to harvest a new crop of more than 200 million tonnes this autumn.

Demand for old corn held in state stocks has been poor, with regular auctions shifting just 12 million tonnes since the end of May versus offers of more than 39 million tonnes. (Reporting by Dominique Patton; Editing by Tom Hogue)

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