Policy shifts, adverse weather conditions and logistical bottlenecks are factors contributing to an expected downtick in forecast corn production in China during the 2017-18 marketing year, according to an Aug. 3 Global Agricultural Information Network report from the Foreign Agricultural Service of the U.S. Department of Agriculture.In its report, the USDA forecast 2017-18 corn production in China at 210 million tonnes, down 5 million tonnes from the agency’s forecast in July and down 4% from the 2016-17 marketing year. According to the USDA, high temperatures have negatively affected yield potential for the 2017-18 crop.

Meanwhile, corn harvested area for the 2017-18 marketing year was forecast at 35 million hectares, down 5% from 2017-17, led lower by policy-driven issues, the USDA noted.

“China’s corn growers typically plant starting on May 1,” the USDA noted. “Lower planted area in Heilongjiang province alone accounts for more than one-third of the decline in national harvested area. MOA promotes corn growers to switch from planting corn for grain to soybeans (nearly half of the total change in area), wheat, sweet corn, silage corn, millet, and forage. Nearly all of the MY 2017-18 estimated harvested area has been sown. Across most of North East China, early crop development in parts of North East China was supported by irrigated land and existing soil moisture.”

Corn consumption in China for the 2017-18 marketing year was left unchanged from the July forecast of 238 million tonnes. The 2017-18 marketing year will be the first full marketing year since China announced supply side structural reforms.

“Freight bottlenecks for truck, rail, and vessels are driving local prices higher than domestic internal trade,” the USDA noted in its report. “Current local market tightness is partly attributed to China’s State Administration of Grain requirements that auction buyers arrange and execute their own transportation. Major state-owned enterprises accounted for the majority of auction buyers at the start of the auction period. However, as the harvest draws closer, small and medium-sized auction buyers are at a significant transportation disadvantage, impacting logistics across North China. Industry sources report that high-quality corn supplies remain tight in North China.”

Source: World Grain. Date: 2017-08-18