Will China Grow More Wheat and Corn in 2013?

Hello from the relatively warm Midwest. We saw 70 F/21 C on Monday, and it finally felt like Spring had arrived! However, the next 10 days are expected to bring a little bit of everything – definitely rain, maybe a few snowflakes and possibly even a little sunshine.

This week I’m going to share some information from USDA’s recent GAIN report highlighting China’s 2013/2014 grain and feed market.

While Chinese government grain support policies including direct payments to farmers, subsidies for the purchase of farm machinery, and price support programs will continue to expand in China, limited arable land, water and other resource constraints are expected to limit future Chinese grain production.

Wheat production is estimated at 118 million tons on strong profit signals and growing conditions. 2013/14 winter wheat conditions are rated above average, with planted area rising by 1 million mu (or 660,000 Hectares (Ha)). This increase is due to a higher government purchase price for wheat, which offers better profit margins than competing crops like cotton.

As for consumption, livestock farmers are expected to use less wheat for feeding on expectations of relatively lower corn prices. Because the 2012/13 wheat crop was affected by head blight, many feed mills reportedly are utilizing less wheat due to feed safety concerns.

In 2012/13 wheat imports are estimated at 3 million tons. For 2013/14, Chinese wheat imports are estimated to shrink to 2 million tons on strong wheat production. Due to expectations of higher international wheat prices and competitive domestic corn prices, the Chinese government is not expected to issue wheat import quotas for feed use.

Corn acreage and production are estimated to rise slightly as are imports due to rising feed and industrial demand.

2013/14 corn acreage and production are both estimated to rise one per cent to 35.3 million Ha and 210 million tons. Farmers are expected to grow more corn over soybeans or pulses on expectations of higher returns.

Normally slated to start at the end of April in the northeast, there is already concern recent wet weather and snow might affect planting pace, but it’s too early to tell if this will actually have any impact.

In 2012/13 good weather contributed to corn quality in the north China plain. However in the northeast, post-harvest rainfall and snow negatively affected corn quality by increasing moisture levels. Lower quality corn will be sold at a discounted rate, and should not enter the strategic reserves which require a higher grade, but it is unclear how much of the corn will be suitable for stocks or feed usage.

Livestock feed corn use is expected to continue to grow on high Chinese consumer demand for more expensive meat protein. Feed mills report substituting less wheat for corn due to more competitive prices. 

In 2012, Chinese meat production (including pork, beef, mutton, and poultry) rose 5.4 per cent to 82 million tons. For 2013, it is estimated that pork and poultry production will increase four per cent.

Click here if you’d like to read more about China’s forecasted production for rice, barley and sorghum.

I’ll close on a personal note by wishing my husband Patrick a very happy birthday!

Have a great week!