China and corn consumption

SGS corn survey for Bloomberg provides insight into a key player in the global corn markets. China is the seconds largest consumer of corn at over 175 mm tonnes, second only to the US. It is close to three times larger than the EU as a consumer. It should also be noted that the US at over 275 mm tonnes uses over a third for ethanol use. China is the largest true corn consumer for food and feed by that measure.

Most of the corn that is grown in China is in the Northeast section of the country around Beijing. The China corn belt has similar weather to the US Midwest. The productivity of their farming is much below what is found in the US, but the farm sizes are smaller with over 50% being less than a hectre. China faces significnat weather conditiosn with thier corn crop. drought is an ongoing problem in the interior while typhoons can provide too much water on the coast.  

Weather conditions for 2012 were worse than 2011 with the survey suggesting that 38% believed that conditions were bad for growing mostly because of high winds and insect damage. Nevertheless, the amount of corn acreage planted increased around 4.71% and the increase in production is expected to be 3.61 percent from 2011 to 2012 harvest. The conditions were not good so the match match in production was not one for one with the increase in acreage. Production increases came from more land used for corn and not an increase in yield. Given the higher prices, acreage for 2013 is expected to increase 19%next year.

What the survey suggests is that deamdn for corn may still be strong until next year's crop comes based on the higher acreage. Exports to China will occur but there may be gaming on when to make those purchases.