China swings to corn deficit for first time in 7 years: CNGOIC

Chinese corn demand has outstripped production for the first time in seven years, according to data from the China National Grain and Oil Information Centre, in a move that could start to erode the nation’s massive stockpile of corn.

Production fell for the second consecutive year to 215.89 million mt, down 3.66 million mt, as the planted corn area fell 3.5% on 2016 levels.

That compared with consumption of 244 million mt, up 22.44 million mt, with animal feed accounting for 146 million mt, up nearly 8.4% on the previous year.

Industrial use also jumped by 10 million mt, or nearly 13%, to 78 million mt.

The data is broadly in line with USDA estimates, as were export figures, which were put at 2.5 million mt compared to the 3 million that the USDA forecasted.

The 2017/18 marketing year marks the second consecutive year in which China’s corn production has fallen while demand has increased, with the market shifting from surplus to deficit for the first time in seven years.

Stock levels key
Seven years of surplus has bolstered corn stockpiles in the country, propelling official estimates towards the 100 million mt level, although unofficial estimates are more than twice that figure.

That has forced the government to take a series of radical actions to clear its corn stockpiles, including cutting back on planted area.

The USDA in its most recent WASDE report puts China’s ending corn stocks at 110.77 million mt, just under half of the global stock estimate at 214.96 million mt.

China has signalled its intent to tackle stock levels, raising the prospect for corn exporters to target the country – particularly in the wake of an announced investigation into US sorghum exports.

Sorghum competes with other crops, including corn, for animal feed, alcohol and other uses.