Corn farmers in China are likely to hold off on selling their latest crops, betting higher prices down the line in the world’s No.2 producer of the grain will help them reap bigger profits. As farmers in the northeastern corn belt start their second harvest without government price support, many are beginning to show the kind of appetite for risk that is common in major other agricultural powerhouses such as the US by potentially delaying sales…Full Article: The Global Times Sept 2017

Key Points

  • In early September 2017, the price of first grade corn in the Port of Jinzhou, Liaoning Province, the price of first-grade corn hit a high of CNY 1,720 (USD 260.97) per MT over worries concerning short-term supply.
  • In 2016, Jilin Province, China’s second largest corn producer, produced 28 million MTs of corn.

ChinaAg Comments

  • In early July 2017, according to the China National Grain and Oils Information Center, corn spot prices in Changsha (Hunan Province), Nanchang (Jiangxi Province), and Wuhan (Hubei Province) have increased CNY 30 (~USD 4.65) to CNY 1,800 (~USD 279) per MT due to flooding. Within China, corn from northern China is typically shipped to ports in southern China. Once in southern China, the corn is transported in barges along the Yangtze River to the inland provinces of Hunan, Hubei, and Sichuan. Due to high water levels on the Yangtze River, barge shipments have slowed causing prices to spike.
  • In November 2016, corn prices in Heilongjiang Province, ranged between CNY 1,240 yuan (USD 183) per MT and CNY 1,320 yuan [USD 195] per ton, a roughly CNY 500 (USD 74) per MT decline from last year. The price decline was partly the result of China ending its corn reserve purchasing program. Consequently, grain traders noted they would delay purchases in order to see how the market reacts.
  • In October 2016, a Beijing publication stated that the average corn price paid by ethanol companies in Jilin Province was CNY 1,450 (US$217.44) per MT. At the same time, the purchase price paid by ethanol companies in Kaiyuan, Liaoning Province, was CNY 1,570 [~US$233] per MT. The publication also noted that from 2007 to 2014, corn purchase price in Heilongjiang Province increased from CNY 1,380 [~US$181.32] per MT to CNY 2,200 [~US$357.42] per MT, before falling to CNY 2,000 [~US$318.35] per MT in 2015. In general, corn imports from the USA total just CNY 1,500 [~US$221.90] per MT.
  • In April 2016, China’s Ministry of Agriculture announced it would increase soybean production at the expense of corn production. The Ministry of Agriculture also noted that soybean production will be promoted on farmland that has historically grown soybeans (e.g. Heilongjiang Province).
  • In March 2016, China’s National Development and Reform Commission (NDRC) announced it would end the country’s corn stockpiling program in 2016. During the same month, China reportedly had approximately 250 million MTs of corn in its state reserves.
  • As of 2015, China’s northeast (e.g. Heilongjiang, Liaoning, Jilin and Inner Mongolia) had approximately 160 million MTs of corn in storage, or roughly 78% of China’s total corn reserves.
  • In November 2015, China announced plans to cut its corn production by 3.3 million hectares across 13 provinces/regions by the end of 2020. This decline in area will cut production by approximately 25 million MTs. According the Deputy Director of China’s Crop Production Department (under the auspices of the Ministry of Agriculture), the major corn producing regions of Liaoning, Jilin and Heilongjiang will see the largest declines in production area, while Shanxi, Shaanxi, Gansu, Guizhou and Yunnan will also be affected somewhat.
  • In September 2015, China decreased its corn purchasing price for state reserves by 10.7%, marking it the first decline since price support measures would introduced in 2008.

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