China’s corn production is expected to fall almost 10% to its lowest in seven years, amid falling demand as a feed crop.
The US Department of Agriculture’s Beijing bureau forecasts a crop of 230m tonnes, 9.4% below the USDA’s June estimate of 254m tonnes.
Consumption of the crop has also been revised down to 259m tonnes - down from the previous month’s estimate of 279m tonnes. estimated by the USDA.
The bureau said the reduced production forecast was "due to lower harvested area, lower yields and government policies favouring soybeans."
’Adverse planting and growing conditions’
It also factored in "adverse planting and growing conditions" during the spring and said the 2019-20 crop was "imminently threatened by the rapid spread and impact of the fall armyworm pest”.
The Beijing bureau estimates corn feed use will be 170m tonnes, down 11% from June’s USDA Wasde estimate of 190m tonnes - the lowest projection estimate since 2015-16.
"Feed demand for hog production is projected lower as African Asian swine fever declines are partly offset by rising poultry production," said the attache.
The consequences of tightening supply has been "high" corn prices across the country, which the bureau said had caused some feed manufacturers to turned towards "competitively-priced" government stocks of wheat and rice.
The bureau said current corn prices had recovered from lows in 2016-17 as mounting pressures from "supply shocks" weighed on historic shifts in demand.
Slowing demand also nudged the attache’s estimate on imports for the current season, down 1m tonnes from the USDA forecast to 6m tonnes.
The report comes after China’s Ministry of Agriculture and Rural Affairs confirmed that China’s northwestern Shaanxi province has detected the destructive pest fall armyworm in its corn crop.
The province is Shaanxi is among 19 provinces reached by the fast-moving pest since it was first reported in southwestern Yunnan in early January, stoking fears over grain output in the world’s second largest corn producer.