Agriculture • Record corn harvest to cut Chinese imports by 60%
Record corn harvest to cut Chinese imports by 60%
China’s much-watched corn imports will tumble by 60% thanks to improved harvest hopes, with Argentina and Brazil also set to help fill a void in supplies left by the drought-hit US output.
China, whose import prospects have been a big factor in influencing Chicago corn prices over the last two years, will import 2.0m tonnes of corn in 2012-13, down from the 5.0m previously expected, matching the previous season’s total, the US Department of Agriculture said.
The downgrade reflected – besides reduced hopes for exports from the US, which faces its lowest yield in 17 years – an increase of 5.0m tonnes to a record 200.0m tonnes in the forecast for the Chinese harvest, thanks to benign weather.
Feed vs meat
"According to reports from industry and government analysts, satellite imagery, and crop yield models, it appears that China’s corn yields in 2012-13 may exceed earlier expectations," the USDA said.
"The overall weather pattern has been favourable for corn growth this summer," with "above-normal rainfall in July" covering the important north east production region.
However, Steve Kahler, chief operating officer at exchange traded fund group Teucrium Trading, also flagged the importance of China’s meat consumption dynamics in determining its need for imports of corn, which is used primarily as a livestock feed.
"They may import more corn because they import less in the form of protein," Mr Kahler told Agrimoney.com.
Safra vs safrinha
The USDA lifted hopes for output in Mexico and South Africa, but particularly in the major South American producing countries of Argentina and Brazil, for which harvest estimates were raised by 3.0m tonnes apiece.
In Brazil, growers are expected, for the first time, to plant more second season, or safrinha, corn, sown as a follow-on crop after the soybean harvest, than first-crop corn to capitalise on high prices.
Ironically, the chance means that the safrinha, or so-called "little harvest", will exceed the safra, or big, one.
"In addition, Brazilian farmers in the Midwest and Northeast are adding more irrigation systems which reduce drought risks, increase yields, and increase crop area with double and triple cropping potential," the USDA said.
Dispute over acres
For Argentina, the second-ranked producer, the USDA boosted estimates for corn area to 3.8m hectares, on a harvested basis, noting that "excellent corn pricing has suggested potentially good returns".
The forecast contrasts with estimate earlier this week from the Buenos Aires Grains Exchange that Argentine corn area may fall 20% to 3.1m hectares in 2012-13.
"Reduced investment capacity among some growers following a bad season, the increase in some costs and a moisture deficit in a big part of the grains belt are variables that counterbalance incentives to plant," the exchange said.
Statistics: Posted by yoda — Fri Aug 10, 2012 10:11 am
View full post on opinions.caduceusx.com