Extreme weather could reduce China's corn harvest

Corn production in China may drop significantly this year, but this information has not yet affected prices.

 

Extreme weather - from heatwaves to floods - has significantly worsened the outlook for China's corn harvest. However, traders are not yet paying attention to this problem, given the large stocks and weak demand for grain. But if the situation does not improve, and the government succeeds in intensifying the development of the economy, the PRC will have to increase the import of corn.

 

In 2023, China harvested a record 289 million tons of corn, but in 2024 the harvest could fall by 7% (or 5-20 million tons), which would be the biggest drop since 2000, when production fell by 17%.

 

Harvesting will be completed in November, then the results will be known, but it is already clear that the balance of the market will not deteriorate much even in the case of such a deficit.

 

At the end of September, local prices rose slightly, but still remain at 4-year lows. Record harvests in recent years have saturated the market, and the economic slowdown has reduced demand from the livestock and food industries. It is still unclear how the new government program to stimulate the economy will change the situation.

 

This year, grain imports to China are lower than in previous years, and the authorities expect their further reduction. If in 2023/24 MR it reached 19.5 million tons, then in the current season it will not exceed 13 million tons.

 

This would have a negative impact on American farmers, who provide most of China's imports.

 

It is not yet clear whether China will have enough of its own reserves to meet rising demand if the economic development program succeeds. In the future, climate change may create problems for future harvests, which will put pressure on the government to stimulate supply.