Situation and Prospect of corn market in China

Lead: USDA report In the first half of 2001, the price of corn in China rose, rebounded from the stable decline in 1999 and 2000, but the price is still far lower than the highest price in the past few years The price of corn in China has fluctuated greatly in the past 10 years, and 2000 is the biggest year in the past six years The highest price of corn was in 1995, 60% higher than in 2000 So even though corn prices rose in 2001, they are still far below the record high However, as China's corn price is higher than the international market price, this will prevent China's corn price from further rising, especially with China's accession to the WTO China's corn production is still affected by the highest record in 1998 It is reported that in 1999 and 2000 the barns were full, exceeding the storage capacity Abundant corn supply has driven corn prices down, allowing the Food Bureau to sell corn at a low price and store it at a high price in the past few years In the past two years, the government has been under pressure to cut inventories, thereby limiting the number of new corn acquisitions, subsidizing export sales and cutting imports The decline in corn production and the substantial increase in subsidized exports in 2000 may have eased the pressure on corn stocks In 2000, China's corn planting area decreased and the main corn producing areas suffered from severe drought, which resulted in an estimated 18% decrease in corn production China has not released information on corn stocks, but many analysts estimate that corn stocks fell by 20 million tons in 2000 It is expected that China's corn production will be affected by drought for the second consecutive year in 2001 / 02 Serious drought in the early growing season affected maize crops in Northeast China Summer rainfall alleviated the drought in Northeast China, but central China suffered drought again, which damaged the corn crops in the region It is estimated that the corn planting area in 2001 / 02 is slightly higher than that in 2000 / 01 China's corn production is expected to be 108 million tons in 2001 / 02, slightly higher than 106 million tons in 2000 / 01, because it is far lower than the record production in the past few years The attractive prices of cotton and other cash crops in the corn producing provinces of North China Plain, such as Shandong Province and Henan Province, may reduce the corn planting area in 2001 / 02 In Northeast China, corn crops are replaced in a limited number, such as Jilin, Liaoning, Heilongjiang and Inner Mongolia The purchase price set by the government is obviously in favor of corn rather than soybean, which increases the corn planting area in Northeast China, where soybean is the main competitive crop of corn 1 Corn export subsidies: China has been one of the world's leading corn exporters for many years Most of China's exports are sold to other Asian countries, mainly South Korea, Malaysia, Indonesia and other Southeast Asian countries The annual fluctuation of China's corn export makes China a major factor affecting the international corn market Like most of China's other agricultural products, corn trade is unpredictable, because China's corn trade is operated by national trade groups, mainly guided by domestic policies, and China's corn stocks are not open to the public In 1999 / 00, China exported 10 million tons of corn Despite the poor output in that year, the export volume is still the highest in China In 2000, China's corn export increased by 143% compared with 1999 China's corn exports continued to maintain a strong pace of nearly 2.3 million tons in the first three months of 2001, but sales slowed in the following months In 2001, most of the exports were sold to South Korea and Malaysia As the price of corn in China is much higher than that in the international market, export subsidies are needed to sell corn to the international market In 2000, the central government provided us $31 / ton export subsidies, and Jilin provincial government increased US $13 / ton export subsidies This brought the total export subsidy of Jilin corn to 44 US dollars / ton Jilin is the most important corn production province in Northeast China, and plays an increasingly important role in China's corn export trade 2 With the end of export subsidies, China's corn export may decline: at the beginning of 2001, there were many speculations about whether China would continue to provide export subsidies After China's accession to the WTO, China will cancel corn export subsidies, but at that time, it is uncertain when China will join the WTO Therefore, it is still uncertain whether China will continue to provide export subsidies at home and abroad The rising price of domestic corn increases the difficulty of export, and the widening price gap between domestic and international markets increases the potential cost of export subsidies China's accession to the WTO will be the main factor affecting the corn market According to the bilateral agreement signed between the United States and China in 1999, China's corn import tariff quota was 5.85 million tons in 2002, and increased to 7.2 million tons in 2004 The import tariff will be 1% in the tariff quota, 80% in excess of the tariff quota and 40% in 2004 Among them, the most important state-controlled trade group will weaken its monopoly position on corn import and export By 2004, the quota of non-state-owned trading companies will increase to 40% However, the agreement does not define what is a non-state-owned trade group, nor does it provide a mechanism for the allocation of quotas to non-state-owned groups After China's accession to the WTO, China may become a net importer from a net exporter of corn Most of the imported corn will be used as livestock feed in the corn shortage provinces in southern China, while most of the northern provinces will continue to use their own corn The competition of imported corn will cause the price of domestic corn to fall, resulting in the decrease of corn planting area and production Will China become a net importer of corn? Rising incomes in China are expected to drive demand for meat, which is expected to increase demand for feed corn as the number of livestock increases The U.S Department of agriculture has long predicted that China will become a net corn importer from a net corn exporter by 2010 (without WTO accession) In this period, it is expected that China will continue to export 2-4 million tons of corn to East and Southeast Asia, far lower than the record export volume of 10 million tons in 1999 / 00 It is expected that China's corn import will reach 4-6 million tons by 2010, far higher than that of 150000 tons in 2000 / 01 It is very difficult to predict the long-term supply and demand of corn in China In particular, there are two key factors that are unclear: 1 The change process of China's livestock industry from self-sufficiency to specialized commercial operation structure is unclear; 2 The growth of coarse grain consumption and the consumption of protein oil meal in the feed field are unclear Small changes in the structure of livestock industry or in the consumption of commercial feed have a greater impact on the total demand for corn China's new regulations on genetically modified products may be the main factor affecting corn and soybean imports 4 Analysis of China's corn profit space: the efficiency of China's corn production system is relatively low Most of China's corn is grown on small plots of less than half a hectare, and the planting process is labor-intensive The lack of funds limits China's vast agricultural research and infrastructure, but the process is still underway Chinese farmers are less aware of the benefits of corn and soybean rotation, and government purchase prices have traditionally encouraged corn rather than soybeans Therefore, Northeast China often exports corn and imports a large number of soybeans at the same time In 2000, China's corn export volume was 10.5 million tons, basically the same as the soybean import volume of 10.4 million tons In recent years, China's soybean production has increased, especially in Heilongjiang Province The benefits of corn and soybean rotation have been widely adopted by producers In early 2001, Jilin Province announced a plan to increase the rotation area of corn and soybean to 2 / 3, from 3 million mu (200000 HA) in 2000 to 5 million mu (333333 HA) in 2001 The decrease in the price ratio of corn to soybean will increase the rotation of corn and soybean China is also looking for demand markets to help the corn industry, as American analysts see it There is at least one proposal as a national policy to increase the production of ethanol fuel to increase the demand for corn, and several provinces have begun to adopt it Henan and Heilongjiang provinces have recently started to use alcohol fuel production facilities, and Jilin Province has announced that it is building a large-scale plant that will start operating in 2002 This is one of the most important programs of the 10th five year plan Officials in Jilin Province also called on the province to strengthen the development of corn value-added processing industry It's similar to the United States: boosting demand for corn and raising farm incomes, creating jobs, reducing dependence on vegetable oil imports, and reducing air pollution.