December 17, 2014

Amid low demand and a bumper harvest, analysts state that China will likely add 40 million tons of corn to its state reserves in the 2014/15 marketing year – a large amount, but still less than the record 60 million tons added the season before. Since May 2014, China has sold 29 million tons of corn from its record high stockpile of 100 million tons which was accumulated over a two year reserve build-up program. Chinese domestic corn demand is slow after outbreaks of avian flu dampened the demand for poultry feed and an economic slowdown in early 2014 negatively affected the hog industry. In 2013 Chinese animal feed production fell for the first time ever, and in the first half of 2014 China’s animal feed production declined by 3% – the largest drop for the period on record.  So far the country has not seen any improvement in livestock demand, and corn processors are operating at a loss as the country is expecting to harvest its second largest corn crop on record according to the China National Grain and Oils Information Center (CNGOIC). The new addition to the stockpile will bring the country’s corn reserves back up to 100 million tons, leading some to believe that China will not be relaxing its trade restrictions it placed upon U.S. corn imports.

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