China Corn Projected Down; U.S. DDGS Exports Up

The U.S. Grains Council (USGC) projects total corn production in China of 148.79 million metric tons (5.86 billion bushels), with lower yields than 2008. High Chinese corn prices are a key reason for the country’s higher distiller’s dried grains with solubles (DDGS) imports from the U.S.

USGC personnel recently toured cornfields in the Northeastern Chinese provinces of Heilongjiang, Liaoning, Inner Mongolia, and Jilin to assess the corn crop and formulate an estimate of this year’s harvest. The Council’s China Corn Tour evaluated nearly 300 cornfields, which includes fields in the Northern China Plain of Anhui, Henan, Hebei and Shandong provinces.

“Our number this year shows a 9.7 percent decrease from China’s National Grain and Oils Information Center’s (CNGOIC) number last year, which was 165.92 million tons (6.53 billion bushels),” said Cary Sifferath, USGC senior director in China. “The drought really affected parts of China’s major corn producing regions, especially in western parts of Jilin and Liaoning provinces and eastern parts of Inner Mongolia province. We project the national yield to be around 79 bushels per acre, compared to CNGOIC’s 2008 figure of 88.5 bushels per acre.”

Sifferath also noted production acreage has been capped as the government is trying to set up regulations to contain the loss of farmland, as any increases in corn acreage are done at the expense of another crop. Despite the likelihood of a decrease in China’s corn production, there seems to be little sign that China will begin importing corn anytime soon.

Corn exports also don’t appear to be likely; China exported 5.27 million tons (207.47 million bushels) of corn during the 2006/07 crop year, but there have only been minimal corn exports since then. Based on the expected drop in production, it is unlikely significant quantities of corn will be exported during the 2009/10 crop year.

“Current corn prices in China would make exporting difficult, as Chinese corn is too expensive to compete in the world market today,” said Sifferath. “In fact, the high prices of corn and other feed ingredients is why we are seeing U.S. DDGS (distiller’s dried grains with solubles) exports to China skyrocket in a very short amount of time.”

USGC projects exports of U.S. DDGS to China in 2009 to reach 250,000 to 300,000 tons — more than 18 times the 8,000 tons exported in all of 2008. Sifferath expects DDGS exports to continue upward to minimize losses resulting from the high price of corn in China.

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