China corn imports to fall as farmers dump other crops to cash in on bumper profits
- China’s maize output in 2021/22 is set to rise by at least 6 per cent after farmers expanded corn planting this year
- The likes of the United States and Ukraine have benefited from China’s corn import binge as the world’s largest grain producer turned into the top corn buyer
Chinese farmers have sharply increased corn planting this year to cash in on demand-fuelled record prices, a trend that is likely to cool the country’s recent rampant appetite for imports heading into 2022.
The expansion, which comes mainly at the expense of soybeans and other crops including sorghum and edible beans, will boost China’s maize output in 2021/22 by at least 6 per cent, according to market participants.
I’m going to grow corn on all my land this year. No more other stuff
“I’m going to grow corn on all my land this year. No more other stuff,” said Li, a farmer in the northern Hebei province who last year grew millet on around one third of the 20 hectares (49 acres) of land he manages.
“Corn prices jumped so high last year. Profits will be good,” said Li, who declined to give his full name.
Consistent and accurate data on China’s crop footprints is hard to come by, especially following the unexplained suspension of Beijing-based agriculture information provider Cofeed. The private consultancy, which many in the market regarded as the most comprehensive supplier of information on grains and oilseeds in China, ceased updating data in April.
With Cofeed offline, and other consultancies reluctant to diverge their crop views too far from government estimates that are often considered conservative, market participants have become increasingly reliant on anecdotal evidence for nearer-term readings on acreage shifts.
02:16
Festival welcomes spring tea harvest in southwestern China
JCI has forecast a 6.2 per cent rise, around 14.9 million tonnes, in corn output in 2021/22 to 253.9 million tonnes, the highest in four years. Based on surveys among farmers and other industry players like seed sellers, JCI estimates corn acreage expanding by 3.9 per cent to 42 million hectares (104 million acres).
“Corn prices are high and benefits are good. People still think there will be a corn shortage [this year] while livestock farming is recovering,” said JCI analyst Rosa Wang.
“Farmers have very high enthusiasm in growing corn. The government also encourages more planting of corn.”
While the JCI projections are on par with and slightly above the 3.96 per cent and 4.9 per cent rises in acreage and output respectively by China National Grains & Oils Information Centre, a government think tank, other forecasters – and farmers themselves – say they are too conservative.
Beijing taps US to fill more than a third of next season’s corn imports
Huatai Futures, a major futures brokerage that conducts farmer planting surveys in China, forecasts a 14.5 per cent rise in output and a 6.2 per cent rise in acreage.
In the northeastern province of Heilongjiang, the country’s top corn and soy grower, farmers have planted 27 per cent more corn than a year ago, said Zhang Zhidong, analyst with Huatai Futures.
JCI estimates corn output in Heilongjiang will soar 20 per cent from a year ago to 36.65 million tonnes in 2021/22.
We have increased corn planting acreage by 25 per cent, which means a 25 per cent fall in soybean acreage
China has long restricted the import of corn via a system of low-tariff quotas, historically totalling around 7 million tonnes annually.
The surge in benchmark Dalian corn prices last year, however, outstripped international prices by so much that importers could still bring in international corn, pay the full tariff and make a profit.
Key exporters who have benefited from China’s corn import binge include the United States and Ukraine.
Amid fears of food inflation, Beijing has supported the corn planting drive in key grains hubs, reversing a years-long policy stance of encouraging growers to diversify away from maize after officials ended a costly corn stockpiling scheme and sold mammoth reserves.
The resulting corn acreage increase “should weigh on prices and reduce China’s need to import a bit,” said Darin Friedrichs, senior analyst at commodity brokerage StoneX, which expects 2021/22 corn imports to fall to 15 million tonnes.
02:48
Chinese farmers fight desertification in Gobi Desert
The US Department of Agriculture’s (USDA) China attaché expects 2020/21 imports to slip to 20 million tonnes, versus the USDA official estimate of 26 million tonnes, on a drop in international corn’s price competitiveness and higher local production.
According to JCI, corn imports could hit 27 million tonnes, down from its estimate of 30 million tonnes last season.
Corn’s gains come mainly at the expense of soybeans, which could have the converse effect of increasing imports of the legume, which comes primarily from the US and Brazil.
Soybean imports ‘exceptionally large’ as pig population nears pre-African swine fever level
“We have increased corn planting acreage by 25 per cent, which means a 25 per cent fall in soybean acreage,” said farmer Liu, who jointly manages around 1,700 hectares (4,200 acres) in Heihe, a traditional soybean stronghold in Heilongjiang.
Another farmer, Han, who manages more than 50 hectares (124 acres) of land in neighbouring Inner Mongolia, has replaced all soybean acreage, about 80 per cent of the land he manages, with corn this year, betting on “bullish corn prices.”
Back in Hebei, Li is relieved he can go back to growing corn after stints growing soybeans and millet in the past few years.
“We don’t have much experience growing other crops anyway,” he said. “We used to always grow corn after harvesting wheat. For years and generations, it has been mostly like this.”
