News ID: 274435
Published: 1134 GMT September 20, 2020

China's corn crophurt by storms, may raise US import purchases

China's corn crophurt by storms, may raise US import purchases
VINCENT YU/ASSOCIATED PRESS
Three typhoons buffeted China’s main Corn Belt in the provinces of Heilongjiang, Jilin, Liaoning and the Inner Mongolia region in August and September.

China’s corn crop is expected to fall by up to 10 million metric tons, or nearly four percent, from the latest government estimates after heavy wind and rains toppled crops in major production areas in the northeastern Corn Belt recently.

Expected production losses have pushed Chinese corn futures to a record high and stoked worries over supply shortages in the world’s second-largest consumer of the grain after it ran down once-mammoth state stockpiles and boosted imports, according to startribune.com.

“We think that corn output in the northeastern region would fall 5 to 10 million tons this [crop] year,” said Zhang Dalong, analyst with Chinese state-owned food processing holding company (COFCO) futures, referring to the latest output estimate from the Ministry of Agriculture for the 2019-20 crop year of 260.7 million metric tons.

“Impact on output and quality of the grain will be felt over the longer term,” Zhang said.

Three typhoons buffeted China’s main Corn Belt of the provinces of Heilongjiang, Jilin, Liaoning and the Inner Mongolia region in late August and early September, flattening plants and flooding fields just as the corn crop reached maturity.

“Flattened crops are not equal to no harvest, and you might recover some output if the crops get handled properly later,” said Meng Jinhui, senior analyst with Shengda Futures.

 “But the cost of harvest will rise and there is increasing risk that the corn crops would lose their test weight while getting moldy,” said Meng, who gave an initial estimate that corn output in the northeastern region will drop by about five million metric tons.

With domestic output falling, China is expected to import more from major suppliers such as the United States.

“We would need to buy more [corn],” said an executive with a state-owned agriculture trading company.

Overseas corn “is cheap so it makes sense to buy. We don’t have enough feed grains but can just buy,” said the executive, who declined to be named as he was not authorized to speak to the media.

US Department of Agriculture data show that China already has committed to buying around nine million metric tons of corn from the United States for the 2020-21 marketing year, which would be a record if it all gets shipped.

During 2019-20, China imported 2.1 million metric tons of corn from the US

China vowed to import $36.5 billion of US agricultural goods annually as part of a trade deal signed in January. Chinese purchases through the first seven months of the year totaled just $8.6 billion, according to US Census Bureau trade data.

During an ABC News town hall event on television last week, President Donald Trump continued to back the trade deal signed in January. On the show, Trump suggested Beijing was now buying record amounts of US corn, soybeans and beef because Chinese leaders knew he was “very, very unhappy” about their handling of the coronavirus pandemic.

China’s crop losses come just as demand strengthens from a fast recovering meat-production industry, fanning concerns about potential feed-sector shortages.

China’s agriculture ministry lowered its forecast for 2020-21 corn output by 1.8 million metric tons to 265 million metric tons, on impact of the typhoons, but the figures were still up from its estimate for the 2019-20 output.

Heilongjiang, top corn producer in the country, said that the typhoons did flatten crops in some fields, increasing farm loss and harvest costs.

The impact on grain production in the region, however, was limited as rescue measures such as drying and draining were made in time, the provincial government said on its official WeChat account.

The acreage hit was quite small, while the damage was mild, it added.

Betting on higher prices, grain traders in northeastern China have expanded storage capacity while farmers plan to hold off sales this year, according to Cofeed, an agriculture consultancy.

Production losses in Heilongjiang, China’s top corn-producing province, could be up to 20 percent, Cofeed said in a report, citing findings from a crop tour earlier this month.

   
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