Corn Production in China May Climb 7.6% on Weather, Curbing U.S. Imports

China, the world’s second-biggest corn grower, may increase its production by 7.6 percent this year, limiting potential imports, said Yigu Information Consulting Ltd., an independent grain advisory company.

Abundant rain, sun and warmth will probably boost output to 156 million metric tons, Feng Lichen, general manager, said in an interview in Dalian yesterday. A crop that size may keep foreign purchases to 3 million tons in the coming year, he said. Imports may be as much as 5 million tons, Li Qiang, managing director at Shanghai JC Intelligence Co., said on Sept. 3.

China bought about 1.3 million tons of U.S. corn in 2009- 2010, the most in 14 years, and sold 13.7 million tons from state stockpiles in the north of the country to cool domestic prices that advanced 17 percent in the past year. Imports may be more than 3 million tons should the government replenish its inventories, said Feng.

“It’s really hard to gauge what the government may do, but my guess is they may not participate in the procurement of the harvest fearing that will drive up prices,” he said. “It’s possible China may abandon its policy of maintaining a certain level of stockpiles.”

Should China decide not to replenish its inventories to previous levels as a permanent policy change, the country would still have more than enough to cover consumption, or even have a surplus for export in some years, Feng said.

While the government doesn’t view corn as a core staple like wheat and rice, it will not necessarily loosen controls, said Shanghai JC’s Li by phone from Shanghai yesterday.

“Be it the government or private sector, China needs to import,” Li said. “While it may not seem profitable to buy corn given today’s prices, the market can easily change.”

Shanghai JC is keeping its prediction of 158 million tons of production even as frost in Heilongjiang may have affected some crops, Li said.

--William Bi. Editor: James Poole

To contact Bloomberg News staff for this story: William Bi in Beijing at +86-10-6649-7578 or wbi@bloomberg.net

Press spacebar to pause and continue. Press esc to stop.

Bloomberg reserves the right to remove comments but is under no obligation to do so, or to explain individual moderation decisions.

Please enable JavaScript to view the comments powered by Disqus.