U.S. corn producers watch China market

   A bumper corn crop in China of 167 million metric tons, an increase of 9 million tons over last year is expected this year, according to U.S. Grain Council estimates released on Tuesday.
   The estimate was developed by the USGC’s China Corn Harvest Tour, which concluded its annual survey last week.
   “Demand for high quality protein continues to grow, thanks to the surging growth of the global middle class,” said Wendell Shauman, council chairman. “As a result, world corn prices this summer and fall reached record highs.
   “Strong harvests will help moderate prices and keep our international growth markets on track. In the long run, that’s good for both producers and consumers all around the world,” he said.
   The council has conducted an annual China Corn Harvest Tour since 1996, at a time when it was the only independent, non-governmental crop information collected on China. The tour consists of detailed field surveys in China’s major corn production regions conducted by teams of private sector analysts with long experience in the China grain market.
   Over the past seven years, the cumulative difference between the council’s crop production estimate and the official Chinese government estimate is about 97 million tons. Private sector analysts generally believe China’s corn reserves, figures which are not officially released, have been drawn down during this period. In addition, domestic corn prices are high, and in the last two years China has reemerged as a major corn importer.
   “All around, government, private analysts and the council say this is a good crop,” said Don Hutchens, Nebraska Corn Board executive director who participated in the tour. “However, the council’s estimate indicates China’s production will be insufficient to meet anticipated domestic demand. In addition, China has drawn down its stocks below its comfort level, which is roughly 25 percent. The council believes the 2011 production will provide for 14-16 percent ending stocks. Therefore, China will need to import to fully satisfy domestic demand and rebuild those stocks.”
   “With the fastest-growing middle class in the world, China has a great opportunity to enhance its food security through trade,” Shauman added. “That translates into a growing opportunity for U.S. producers over the next several years.”
   As recently as 2002-2003, China exported nearly 600 million bushels of corn. Exports then began to decline, and China was a net importer in 2009-2010 and 2010-2011. Projections for China’s corn imports in 2011-2012 vary widely, from 2 million tons to more than 10 million tons.