Wednesday, March 7, 2012

China's Corn Supply Less Than Reported

China's domestic supply of corn appears to be quite a bit less than estimated, as local and regional farmers, apparently in an attempt to boost their status with the Chinese government appear to have overestimated the corn harvest in the country.

Both the Chinese government and the USDA said the country had produced a record crop of 191.8 million tons in 2011, but that appears to be anywhere from 6.8 million tons to 24 million tons less than the actual corn production numbers.

Domestic Chinese corn has already started to jump in price in response to government agencies and private producers bidding for the grain in the tighter-than-expected market.

Originally the USDA estimated China's corn imports at about 4 million tons, assuming the accuracy of the 191.8 million ton figure. That could, and probably will change significantly as the situation unfolds. Some estimate that corn production in China for 2011 may be as low as 168 million tons.

China has officially come out and said they have enough corn reserves and won't need to import a lot of corn for 2012, but that could be a negotiating ploy to keep corn prices somewhat stable as demand ramps up.

Even so, and with the drought pressuring corn supply in Brazil and Argentina, China can easily enough shift to importing wheat as a secondary choice if corn prices rise too high, waiting for an opportune time when the price pulls back. It'll be an interesting year for corn imports and exports around the world, including the United States.

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