Following its annual crop tour of China, the U.S. Grains Council released an estimate of China’s 2011 corn production, pegging the country’s crop at 6.6 billion bushels, up 5.6% from last year. Don Hutchens, executive director of the Nebraska Corn Board, participated in this year’s crop tour, which wrapped up last week.
“The 2011 corn crop I witnessed in China was far more impressive than I expected,” he said. “They have little, if any, crop loss and average yields are expected to be in the mid 80 bushel per acre range.”
Hutchens noted, however, that trying to figure out where China is heading from both an economic sense and in agriculture production is difficult.
“When you look at China you see a country that seems to be in the driver’s seat economically. Yet it has to feed 1.2 billion people and is harvesting 80% of its corn crop by hand and transporting it via small carts and wagons. Meanwhile, more skyscrapers are going up and it’s the number one market for Lamborghinis. In taking it all in, it’s an enigma and you quickly realize that no one really knows what the ripple effect of China will be,” he said.
China is the world’s second leading corn producer, producing about half that of the United States, but it emerged as a net corn importer a year ago as surging domestic demand outstripped its own production. Despite this year’s record production, the U.S. Grains Council said it anticipates rising demand will continue to create export opportunities for U.S. farmers in the 2011-12 market year and beyond.
“China has great potential to increase its corn yields, but when you consider they have a population of 1.2 billion people that are looking to add higher quality protein to their diets plus create a 25% grain reserve, then you see an opportunity for U.S. corn exports,” Hutchens said. “They place a high value on corn and what it can be turned into. They have also had a taste of the feed value of dried distillers grains, which are produced by ethanol plants, and discovered what an outstanding livestock feed it is, and they want more.”
The Council’s China Corn Harvest Tour began in 1996 when it provided the only non-governmental crop survey report available for China. Conducted by teams of experts from the private sector, most with long experience in the China grains market, the Council report has gained a reputation for consistency, reliability, and transparency in assessing an often-opaque China supply-and-demand situation.
China’s rapid economic growth has produced the world’s fastest growing middle class, and demand for meat and dairy products is soaring. China’s domestic corn prices this summer reached $10 a bushel and it has seen drawdowns of already low stocks.
A record harvest may reduce these pressures in the short run, the Council said, and may give China an opportunity to rebuild depleted stocks through imports. Current estimates for China’s likely 2011-12 corn imports vary widely and range from 78.7 million bushels (USDA) to more than 393.7 million bushels (private estimates).
“Over time, China’s need for corn will grow and the United States, being the world’s largest producer would be a logical source for that corn,” Hutchens said. “With our ability to grow enough corn for our own feed, fuel and food uses and still have enough left over to satisfy a healthy export market, it just makes sense that we’ll continue to be the reliable source for corn globally.”