China Grain Output May Have Been Overstated, Imports to Rise
Grain output in China, the second- biggest corn consumer, may have been overstated in past official estimates, suggesting supply may be less than expected, according to Shanghai JC Intelligence Co.
A discrepancy of about 100 million metric tons in the last three years alone was caused by unreliable statistics, chairman Li Qiang told an industry conference in Boao, Hainan. Shanghai JC is China’s largest independent agricultural researcher by membership. The overstated volume represents 18 percent of annual output, according Bloomberg News calculations based on government statistics.
An official at the National Bureau of Statistic’s media department could not immediately comment and declined to be identified.
Corn prices in China rose to a record last week on speculation supplies may not be as large as expected. China harvested 571 million tons of grains in 2011, the eighth consecutive gain, according to the National Bureau of Statistics. Imports in the 2012-2013 marketing year beginning Oct. 1 may rise to 8.9 million tons from estimated 6.6 million tons this year, Shanghai JC said March 19.
Market participants have long suspected China’s supply and demand numbers for grain may be overstated because of inaccurate reporting and attempts by local officials to secure increased government funding, Li said in an interview after his speech.
China’s official statistics show corn output last year rose 8.2 percent to 192 million tons. Many in the market doubt last year’s corn data is realistic and supply may be smaller than expected, the Jilin Corn Center Wholesale Market said March 15, citing analyst Li Xigui of the China National Grain & Oils Information Center.
Corn demand may outstrip domestic production by as much as 20 million tons by 2020 if there is no significant improvement in yield, boosting imports, said Cheng Guoqiang, deputy director of the Development Research Center of the State Council.
“Now is a window of opportunity,” said Shanghai JC’s Li. Corn users should use their annual import quotas to buy now, because prices for next season’s supply are relatively cheap, and government policies are also shifting towards supporting imports of agricultural products, he said.
Net corn imports may reach 10 million to 15 million tons a year by 2015, Rabobank International said March 14. Buying may reach 20 million metric tons by 2020 on the basis of domestic yields of 5.68 tons per hectare, Fan Zhenyu, deputy general manager at the corn division of Cofco Agri-Trading & Logistics, said March 15.
Demand for food and livestock feed has increased in China as economic growth has lifted incomes, driving an increase in protein consumption. Corn is used to make animal feed.
The use of corn to produce biochemical products is growing rapidly and may make China a “large corn importer” to meet demand, said the Development Research Center’s Cheng. Annual demand for industrial use has increased to 45 million tons to 50 million tons from 38 million tons in 2008, he said.
The government should reform its corn-import system by either dropping quotas or raising the amount that buyers are permitted to purchase, Liu Yonghao, chairman of New Hope Group Co., the nation’s biggest feedmaker, said March 5. Imports jumped 32 percent to 751,179 tons in January, customs data showed.
The state-controlled quota-based management of corn imports won’t change in the next few years, Cheng said today.
Corn for September delivery on the Dalian Commodity Exchange closed little changed at 2,465 yuan a ton. The most- active contract on March 16 climbed to a record of 2,497 yuan.
To contact Bloomberg News staff for this story: William Bi in Beijing at email@example.com