Corn Crop in China May Miss Output Target Because of Dry Weather, DTN Says

China, the second-largest corn consumer, may miss an output target of 168 million metric tons in the year beginning October if dry weather persists in the central and northeastern growing areas, Telvent DTN Inc. said. Futures snapped four days of losses.

“It’s a little uncertain right now if they’re going to be able to really reach that kind of production level,” Bryce Anderson, chief agricultural meteorologist at DTN, said today. “If they don’t get any rain by the second week of July, they’re looking at some real problems.”

China’s corn harvest faces the risk of damage as U.S. inventories in the year ending 2010-2011 were estimated by the U.S. Department of Agriculture to drop to the lowest since 2006- 2007. The U.S., the world’s largest grower, will account for 57 percent of global exports this year, according to the U.S. Department of Agriculture.

Production losses may push China to become a net corn importer for a second straight year, helping support global prices, Takaki Shigemoto, an analyst at research and investment company JSC Corp. in Tokyo, said today by phone.

“Current hotter and drier weather in northern China, which people say is more severe than last year, may be a key driver” for the market, Shigemoto said. “Less production will drive the country to import more grain.”

Corn futures advanced for the first time in five days. The contract for December delivery added as much as 0.4 percent to $3.66 a bushel in Chicago before trading at $3.655.

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“This is a scenario that I think is still a little bit concerning because right now we don’t see that there’s going to be a real widespread rainfall pattern in central and northeast China during the next week or so,” DTN’s Anderson said in a phone interview from Nebraska.

The northeastern part of China, which accounts for most of the nation’s corn output, has been having dry weather while in the south almost 30 million people in 10 provinces have been affected by storms, displacing 2.4 million people.

China’s corn production this year may increase 2.5 percent from 2009 to 168 million tons as farmers boost plantings, the state-backed China National Grain & Oils Information Center said this month. Northeastern China, including the provinces of Liaoning, Jilin and Heilongjiang, accounted for almost 40 percent of the nation’s corn output, according to a study by the Economic Research Service of the USDA.

As of June 17, the outstanding sales of U.S. corn to China were 885,100 tons for delivery by Aug. 31, and accumulated exports were 60,000 tons, the USDA said yesterday.

China may buy more than 1 million tons in the next 18 months, on top of what has already been purchased, Thomas Dorr, president of the U.S. Grains Council said June 16.

The Asian nation’s growing regions need rain this month as the corn crop enters its reproductive stage, which requires more water, determining the final yield, said Anderson, who has been DTN’s chief agricultural meteorologist since 1991.

To contact the reporter on this story: Luzi Ann Javier in Singapore at ljavier@bloomberg.net

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