China's wheat imports will rise further than had been
expected this year, thanks to poor quality – a problem too for old-crop corn
stocks, which thanks to fungal toxins "may not be suitable for processing or
US Department of Agriculture staff in Beijing pegged China's
wheat imports in 2016-17 at 4.0m tonnes – 500,000 tonnes above the USDA's official
estimate and a figure well above the country's average buy-ins.
Indeed, it would be the third highest imports of the last 20
years, behind the total of a little above 6.7m tonnes purchased in both 2004-05
The forecast reflected the damage to wheat from harvest-time
rains which "downgraded crop quality and yields across East China's
wheat-growing provinces including, Jiangsu, Hubei and Anhui".
'Sprouted, unsound kernels'
Official data peg at 8% of the national harvest the proportion
of "sprouted, unsound, and musty kernels" as a result of the late rains on ripe
crops, up from 5.5% last year.
However, "industry sources report that the actual share of
damaged grain may be greater than reported".
In Henan, the top producing province, and Anhui, Hubei and
Jiangsu, also in the east of China, where wheat was "seriously impacted" by the
poor weather, sources are reporting that "much as 24% of the crop may be out of
Indeed, in Anhui and Jiangsu, state grain procurement
elevators are reporting a "rejection rate of 20%" of crop submitted.
'High levels of
For corn too, quality is proving an issue – at least for
supplies held over from previous years.
"Industry sources report that temporary reserve corn supplies
are not suitable for feed use."
"Old-crop corn supplies sold at auction are out-of-condition
and have been tested to contain high levels of mycotoxins," that is, toxic
residues from fungal crop infections.
These toxins mean the crop "may not be suitable for corn
processing or feeding", the bureau said, if adding that corn from this year's
harvest is meeting feed mill specifications.
An increased estimate for crop loss, combined with a boost
to demand from increasing demand from pork and poultry producers, prompted the bureau
to hike to 234m tonnes its forecast for China's corn consumption in 2016-17.
That figure is 8m tonnes more than the USDA's official
forecast, and represents a rise of 16.5m tonnes year on year.
However, the bureau pegged China's corn imports this season
at a modest 1.0m tonnes – a six-year low, and 2.0m tonnes below the figure the
USDA is forecasting.
The bureau flagged "diminishing price competitiveness for
imported corn", as the removal of China's guaranteed price regime for farmers,
amid a subsidy shake-up, undermines domestic values.
Instead, the extra draw on China's own supplies will allow the
country to make extra headway in its drive to erode its huge corn stocks, with
the bureau pegging inventories at the close of 2016-17 at 101.8m tonnes, a drop
of 15.0m tonnes year on year.
• Agrimoney has published an in-depth report on China's current situation, China 2017: Agricultural Deregulation and Its Global Impact. More information: www.agrimoneyresearchreports.com