China 2009-10 Corn Crop To Be 148.79 Mln Tons-US Group

The U.S. Grains Council on Monday projected a corn crop in China of 148.79 million metric tons, down 9.7% from last year, as drought takes its toll. The production estimate follows the grain council’s annual China tour. Last year’s crop totaled 165.917 million metric tons, according to China’s National Grains and Oils Information Center. The council said that earlier this month China estimated this year’s crop at 165.5 million metric tons.

The tour sent 15 people in northeast China and the north China plain, including areas hit by dry weather this year.
A smaller crop will likely lead to continued higher prices in China, said Cary Sifferath, the council’s senior director in China, but that the nation will likely not begin importing corn, noting “political sensitivity” to importing corn as well as adequate supplies.

“They still have fairly large amounts of corn stocks available,” he said. However, China’s high corn prices have “led to some opportunities for U.S. feed grain products, specifically the distiller dried grains” and could continue to do so, he
said.

Imports of U.S. distiller dried grains, a byproduct of corn-based ethanol production that can be used as livestock feed, have surged since June or July, Sifferath said. He said after exporting roughly 8,000 metric tons of distiller dried grains in 2008, he could “easily” predict 250,000 to 300,000 in 2009.

The demand is coming from across the livestock sector in China. Allendale vice president for marketing Joe Victor said the council’s projection is “aggressive” and should be supportive to the market. “If the production is going to
be down that hard, you would certainly think it’s going to be supportive to U.S. corn futures,” he said.

But Victor also noted that China has a “copious” amount of corn stocks. He added that a shortfall in China production might not give U.S. corn producers the same opportunity that a drop in Argentina’s corn production did last year,
when importers that would have turned to South America turned to the U.S. instead. “The problem is that China is not an exporter,” he said.

Source: CME Group