Chinese corn acreage to rebound in next season

22-01-2018 | |
Photo: Emmy Koeleman
Photo: Emmy Koeleman

The use of corn in China has been increasing over the last few years. It is expected that the increase will continue, mainly driven by pig restocking.

This is stated in the Rabobank report: China Food & Agribusiness Monthly, Outlook 2018. Coming into January 2018, China’s new corn crop prices is staying at the relatively high level, despite corn prices usually deceasing during the harvest season. The main reason is that the previous oversupply situation has finally been reversed. 2017/18 will be the first deficit year for Chinese corn, since the market-oriented reform policy was initiated in March 2016. It is projected that domestic consumption will exceed production by 15m-20m tonnes.

Expanded pig production capacity

According to Rabobank, feed corn usage seems to be steadily increasing, mainly driven by pig restocking. Although pig supply is expected to be low in the first quarter of 2018, Rabobank expects that pork produciton will increase this year. Production growth will be be driven by larg-scale players, who have been aggressively expanding capacity in the past 2 years. At the same time, this will lead to lower margins for pig producers due to the downward trend in pig prices.

More bioethanol plants planned

Corn usage for ‘industry usage’ will ensure the robust growth. By 2018, over 20m tonnes of wet milling capacities will be coming into operation. Including both starch and ethanol, which is to consume more domestic corn, mostly in north-eastern China. Meanwhile, the additional capacities will also enhance competition and lower industry margins. Several new bioethanol plans will be put into operation in late 2018, while the market impact should occur in 2019.

Source: Rabobank

Emmy Koeleman Freelance editor