Dim Sums: Agricultural Markets in China

Officials in China are pushing ahead with a nationwide campaign to shut down pig farms in populated and environmentally-sensitive areas. The shut-down plan appears to be cutting pig numbers at a time when a short supply of pork is causing prices to soar. "arrest warrant" for a pig satirizes the campaign to close or move pig farms. source: toutiao.com A series of laws and regulations issued by Chinese officials over the last two years appear to signal a new era in which pigs will be physically segregated from the human population, a major undertaking in a society where the species have lived together for thousands of years. Local bans on pig farms began in 2013 following the embarrassment caused by thousands of swine carcasses that floated down the river into Shanghai.  In January 2014, regulations were issued to prevent pollution from waste emissions of "scale" livestock and poultry farms; the regulat...

China's 2016 wheat harvest is getting under way. With a near-record output estimated at 130 million metric tons and with demand sluggish, the government is expected to step in and buy up even more wheat than it did last year. However, innovative bakers can't get enough of the high-gluten wheat they need for their flour. One assessment of the prospects for the 2016 wheat market sees a big surplus of low-quality wheat that farmers in some areas may have trouble selling. Wheat is being harvested in the southern end of the wheat belt in central China, and it will move north through Jiangsu, Anhui, Henan, Shandong and Hebei Provinces over the next month. Weather conditions have varied widely across wheat-growing areas, and the quality of the crop is expected to be uneven. There is not much good quality old grain available, and the price is high. The 2016 minimum price for wheat is set at 2360 yuan/ton. Big flour mills are buying small volumes of good quality new wheat at 2300-2...

The following story actually happened. I have statistics to prove it.    ************************************************** A Martian Interplanetary Task Force on agricultural commodity markets recently landed on the Earth. A team member assigned to China set out for the city of Dalian, where that country's most active futures market is located.   As our Martian friend approached the Dalian Commodity Exchange, he came upon two Chinese men in animated conversation, each holding a sheaf of papers in his hand. The Martian stopped to listen. “They’re up to their tricks again!” One man exclaimed. “USDA and ABCD—different letters, but the same game! They won’t stop until they own our entire country!” The second replied. “What can be done to stop them?” The first man waved the paper held in his sweaty hand. The curious Martian sidled up the two men. “May I ask what you’re discussing?” The Martian ventured. “Haven’t you read the U.S. Departme...

China's grain officials say that 125 million metric tons of corn was purchased from the country's 2015 crop and stored in the national "temporary reserve." Analysts summing up the purchases and subtracting the sales from the reserve over the past four years estimate that the stockpile has grown to 270 million metric tons at the end of the November-April period. There is little doubt that China has a huge surplus of corn, but the plausibility of these numbers is questionable. The temporary reserve purchases exceeded the amount of corn produced in the four provinces where the program operated. Estimates of corn output for Heilongjiang, Jilin, Inner Mongolia, and Liaoning Provinces by China's National Grain and Oils Information Center (the Statistics Bureau reports official provincial production estimates a year after the harvest), totaled less than 100 mmt, more than 25 percent less than the amount of corn purchased for the temporary reserve in the region. Jil...

A Chinese news site warns swine producers to be on the alert for mycotoxins in corn that could kill off their "golden pigs" during this time of soaring profits.  Soozhu.com has a web page warning that corn released from the government's temporary reserve could be contaminated with a number of toxins due to excessive levels of mold in the corn. The warning explains that corn reserves ballooned from 10 million metric tons in 2012 to 58 mmt in 2013, 80 mmt in 2014, and are now up to 260 mmt. Although the reserve standards require mold content to be less than 2% and moisture less than 14%, the reserve nevertheless contains large volumes of corn with aflatoxin, zearalenone, deoxynivalenol, and ochratoxin.  Soozhu.com warns that 70 million metric tons of corn produced in 2012 and 2013 could soon be released to the market. This corn is beyond the usual maximum 2-to-3 years to be held in storage in northern China.  Swine consuming feed that ...

The area planted in corn by Chinese farmers rose by 11.7 million hectares--45 percent--over the past decade. Officials in China have bragged for years that their subsidies and guaranteed minimum prices played the key role in boosting grain production. Now officials have discovered that the country is producing far more corn than it can consume. Adding to the list of silly things that result from farm subsidies, Chinese agricultural officials have announced that they will now spend 3.5 billion yuan (US$ 540 million) to reduce corn production . The funds are for the so-called corn structural adjustment program, which they expect to cut corn planting by 20 million mu (1.3 million hectares) this year.  It's unclear exactly how the money will be spent. The program will fund 100 pilot counties where farmers will be encouraged to switch from mono-cropping corn to rotation with soybeans or minor grains, fodder crops, crops that are in high demand (reportedly peanuts), rice, and sp...

The eighth annual survey of rural migrant workers released by China's National Bureau of Statistics last week shows that the geyser of cheap labor flowing out of the country's vast hinterland slowed to a trickle during 2015. The number of nonfarm workers from rural areas grew just 3.5 million during 2015, the slowest rate since the recession year of 2009. The growth in rural workers peaked during the stimulus-fueled growth year of 2010 when the rural migrant workforce swelled by nearly 12.5 million. Since then, growth in the rural migrant labor force has tailed off. Source: Calculated from China National Bureau of Statistics rural migrant surveys. The NBS survey estimated that 277 million people from rural households were employed in nonfarm jobs during 2015. That represents 36 percent of total employment in China (774.5 million) last year. Of the 277 million rural employees, 168.8 million were employed outside the district where they reside and 108.6 million were empl...

Hog supplies have shrunk and pork prices are soaring in China. China's National Bureau of Statistics estimated that pork production during the first quarter of 2016 was down 5.9 percent from the same period a year ago. That shrinkage follows a 5.1-percent decline during the first half of 2015. If the numbers are accurate, they portray an unprecedented decline in pork supplies. During the "blue ear" disease epidemic in 2007, China's pork production fell 7.8 percent, but production nearly recovered the following year. This time the shortage is due to a years-long downward slide in swine inventories due to exits of small-scale producers who may not return. Chinese pork prices have soared as the supply tightened over the past year. The National average retail pork price reported in April 2016 by the National Bureau of Statistics is up 35 percent from a year earlier. The Ministry of Agriculture says wholesale hog carcass prices are up 40 percent, and live hog price...

At an April 26 press conference, the head of China's Grain Bureau acknowledged that the country's grain reserves are at a record high . Normally, plentiful grain supplies is a good thing, but not when there's no place to store it. The Grain Bureau chief warned that one-sixth of the grain is stored in rudimentary facilities where it is vulnerable to safety hazards.  According to statistics quoted by the Grain Bureau chief, "policy grain" procured by the government accounted for 64 percent of the grain produced last fall (155 million metric tons out of the total 239 mmt procured). Most of that "policy grain" is corn. Other sources report that 123.4 mmt of corn had been procured for the "temporary reserve" as of April 25--more than half the corn harvest reported by the National Bureau of Statistics. In March, the exploding corn reserve prompted the government to announce the cancellation of the "temporary reserve" program for cor...