The China Agricultural Supply and Demand Estimates (CASDE) includes supply and demand balance sheets for corn, soybeans, cotton, vegetable oils, and sugar, plus a brief narrative explaining supply and demand conditions for each commodity. (Notably, rice and wheat are excluded--perhaps these commodities are too sensitive to discuss.) The report appears to be modeled on the USDA's WASDE report, although it only covers a few commodities and is limited to China's S&D situation. The report contains S&D estimates for market years 2014/15, 2015/16, and 2016/17. The report will be released monthly with updated estimates, and can be downloaded free from the Ministry of Agriculture web site (it is in pdf format in Chinese).
The CASDE's estimates of China's corn S&D indicate a larger build-up of inventories than the USDA's WADE. The Chinese estimates have lower consumption of corn than USDA's report and larger imports for the current year. While the world is awash with corn, the CASDE sees only a 3-percent decrease in China's corn output in 2016/17. According to the CASDE, China's feed use of corn will rebound with the recovery of the livestock sector, and they say consumption will be stimulated by a subsidy for processors and "reform of the corn reserve policy." Corn imports will drop from 4.6 million tons in 2015/16 to 2.4 million tons in 2016/17, due to the closing of the gap between Chinese and international corn prices. China will continue to increase its corn inventory by 9.49 million tons during 2016/17. However, the build-up of corn inventories will be slower than during 2014/15 (+37.8 million tons) and 2015/16 (+36 million tons). The inventory increases estimated by the CASDE are faster than USDA's WASDE estimates, but not as rapid as some other estimates coming out of China. (Actual corn inventories are not reported, since these are a "state secret.")
|China corn balance sheet (China Ministry of Ag, July 2016)|
|Sown area||1000 HA||37,123||38,117||36,026|
|--waste and other||Mil MT||9.05||9.56||9.81|
|Inventory change||Mil MT||37.82||36.00||9.49|
The CASDE report anticipates a modest rebound in China's soybean output for 2016/17, but it will play an essentially inconsequential role in meeting China's demand for over 99 million tons of soybeans expected next year. The increase in imports is characteristically conservative, nudging up from just under 84 million tons in 2015/16 to 85 million tons in 2016/17.
|China soybean balance sheet (China Ministry of Ag, July 2016)|
|--loss & other||Mil MT||2.84||2.90||2.48|
|Inventory change||Mil MT||0.53||-0.60||-1.84|
China's cotton demand remains weak--as it has been since 2008. Both production and consumption of cotton will fall during 2016/17, according to CASDE. The decline in cotton production is attributed to the cut in the Xinjiang target price and generally falling cotton prices in China. Production is falling faster than consumption, and cotton imports remain at the much slower pace set during 2015/16. Still, CASDE expects cotton stocks to fall only about 1.5 million tons; the ending inventory for 2016/17 will still be 140% of annual consumption.
|China cotton balance sheet (China Ministry of Agriculture, July 2016)|
|Beg. Inventory||Mil MT||12.40||12.80||11.66|
|End Inventory||Mil MT||12.80||11.66||10.09|
Soybean oil production will rise, driven by increased imports of soybeans, says CASDE. Rapeseed oil production will drop due to a 20% decrease in rapeseed production due to elimination of its price support policy.
|China vegetable oils balance sheet (Min Ag, July 2016)|
|--Soy oil||Mil MT||14.01||14.82||15.15|
|--Rapeseed oil||Mil MT||6.92||5.77||5.25|
|--Peanut oil||Mil MT||3.03||3.00||3.08|
|--Palm oil||Mil MT||4.07||3.60||3.40|
|--Rapeseed oil||Mil MT||0.73||0.82||0.75|
|--Soy oil||Mil MT||0.77||0.60||0.58|
|Inventory change||Mil MT||1.31||-0.13||-0.84|
China's sugar imports are estimated at 3.5 million metric tons during both 2015/16 and 2016/17. Production will bounce back during 2016/17 while consumption remains relatively steady.
The CASDE report is a major improvement over past reports. The narrative conveys reasoning behind key numbers. In contrast, a series of monthly reports issued over the last several years included no balance sheets and mostly consisted of reading off import and price statistics with little or no interpretation. The CASDE report, importantly, lists dates when future monthly reports will be released. Past reports were released sporadically or not at all. In the CASDE, each commodity narrative is signed by a Ministry of Agriculture analyst and contact information is given. This is a major innovation in Chinese bureaucracy where no one below the top leadership ever wants to offer opinions or take responsibility for anything.
The CASDE report complements related Ministry of Agriculture activities, including an annual "outlook conference" and ten-year projections released each of the past two years. These activities also appear to be at least partly modeled on the USDA outlook conference and the ten-year projections made by USDA and OECD/FAO.
There is no confirmation of the rumor that the release of the first CASDE report is linked to the Martian study team's visit reported on this blog two months ago. That team was alarmed to find that the world's largest agricultural country issued no reports on agricultural supply and demand information. As we understand it, taking advice from Martians is not part of the "China Dream," so the rumor can't possibly be true.
|China commodity prices (RMB per metric ton)|
|Soy oil||Domestic ex-factory||5500-5900||5600-6300||5700-6400|
|Palm oil||C&F imports||4300-5500||4300-5800||4400-6000|