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.

Argentina, Brazil Corn Production May Exceed Estimates

Corn production estimates last month by the U.S. Department of Agriculture for Argentina and Brazil may have been understated, as a report from Informa Economics on March 2 said.

Drought in both countries resulted in the USDA projection a 22 million ton harvest in Argentina and a 61 million ton harvest in Brazil. According to Informa, those numbers could reach 22.5 million tons of corn harvested in Argentina and 61.5 million tons or corn harvested in Brazil for 2012.

Offsetting that data was the news South Korea’s Nonghyup Feed Inc., the largest buyer of feed grains in the country, acquired 126,000 metric tons of U.S. corn on March second, which is scheduled for July delivery.

That has helped push up the price of corn futures slightly in Monday trading.

Brazil Selling 700,000 MT Corn to Domestic Market

The government of Brazil announced Friday it was going to sell as much as 700,000 metric tons of corn stock in its domestic market in response to the draught that has hit the southern states of the nation.

States targeted via auctions are Santa Catarina and Rio Grande do Sul,
where a sell of up to 500,000 metric tons of corn will be initiated.

The Brazilian Agriculture Ministry said this: "The measures are a way for the government to supply the market's shortage of the product and help the sector, which faces difficulty due to the smaller crop caused by weather factors,"

Other states in Brazil targets from corn sales are Minas Gerais, Rio de Janeiro and Espirito Santo. Corn sales are focused on those looking to acquire feed for the various meat industries.

The other 200,00 metric tons of corn is slated to be sold directly to Rio Grande do Sul and Santa Catarina, which have been hit the hardest by the drought. There the fixed price will be $12.18 for each 60-kilogram bag of corn feed.

Included in the fixed price sale will be agricultural cooperatives, along with buyers of feed for meat producers.

Corn farmers in the U.S. could boost production by 15 percent over 2011 as a result of the drought in Brazil and in Argentina. Corn exports in the U.S. are expected to rise in response to the lower supply in the region.

Brazil Drought Effect Downgraded

The severity of the effect of the ongoing drought in Brazil's Parana state, located in the southern region of the country, is worse than originally believed, according to a Dow Jones Newswires report.

Agroconsult's Fabio Meneghin, said, "The western part of Parana, near the border with Paraguay, has been particularly affected. I didn't expect it to be so bad."

Quoting one farmer from the region, the story said corn losses are estimated to be 40 percent on his farm, with soybean losses even higher, estimated to be about 60 percent.

There was no rain in the region for about 45 days, added the farmer.