China MOA S&D Estimates (Aug)

China will produce more corn than it consumes again during 2016/17, according to the latest supply and demand estimates from China's Ministry of Agriculture (MOA). Estimates of Chinese corn prices have been revised downward, and MOA expects drawdowns of Chinese soybean and cotton stockpiles to cut into imports of those commodities.

This week, MOA released its second monthly "CASDE" (China Agricultural Supply and Demand Estimates) which includes balance sheets for corn, soybeans, cotton, vegetable oils, and sugar. The report excludes rice and wheat.

The August report increased the estimate of the 2016 Chinese corn crop to 216.5 million metric tons, up 2 mmt from the July estimate based on good weather that is expected to bump up the yield. Estimates of feed and industrial consumption of corn for 2016/17 were also increased, stimulated by falling prices in China. The estimates of corn prices for both 2015/16 and 2016/17 were revised downward from last month, as well. China's corn imports are expected to fall to 2.4 mmt in 2016/17. Corn prices are expected to be in the 1500-1650 yuan/mt range, down about 200 yuan from 2015/16.

China corn balance sheet (China Ministry of Ag, August 2016)
Item	Unit	2014/15	2015/16	2016/17	Change from last month
Sown area	1000 HA	37,123	38,117	36,026
Yield	KG/HA	5,809	5,892	6,010	58
Production	Mil MT	215.70	224.58	216.51	2.24
Imports	Mil MT	5.52	4.60	2.40
Consumption	Mil MT	183.39	193.35	208.17	1.19
--food	Mil MT	7.52	7.65	7.72
--feed	Mil MT	112.56	120.61	132.68	0.69
--industrial	Mil MT	52.57	53.97	56.35	0.50
--seed	Mil MT	1.69	1.66	1.61
--waste and other	Mil MT	9.05	9.56	9.81
Exports	Mil MT	0.01	0.03	0.20
Inventory change	Mil MT	37.82	36.00	10.38	0.89

While China's corn output will be less than last year, MOA expects China's corn inventory to increase again during 2016/17. The expected surplus of 10.38 mmt will be less than the 37.82 mmt surplus in 2014/15 and the 36 mmt surplus estimated for 2015/16. The estimate of the surplus for 2015/16 was revised downward this month due to progress in auctioning corn reserves. MOA expects a reduction in DDGS imports due to anti-dumping duties, which will "increase the value" of domestic DDGS and increase corn used for alcohol processing. MOA thinks domestic corn prices will fall below the C&F price of imported corn during 2016/17.

China corn prices (RMB per metric ton)
Description	2014/15	2015/16	2016/17
production areas	2266	1800-1880	1500-1650
last month		1830-1930	1550-1750
C&F imports	1643	1500-1670	1600-1750
last month		1500-1670	1650-1850

MOA reduced its estimate of 2016/17 soybean imports by 1.5 mmt to 83.5 mmt. They also cut their estimates of soybean crush consumption. The government's injection of soybean reserves into the market will replace some imports. China's soybean production shrank to just 11.6 mmt for 2015/16 and will be up to 12.86 mmt for 2016/17, according to MOA.

China soybean balance sheet (China Ministry of Ag, July 2016)
Item	Unit	2014/15	2015/16	2016/17	Change from last month
Area	1000 HA	6,800	6,590	7,156
Yield	KG/HA	1,787	1,762	1,797	14.00
Production	Mil MT	12.15	11.61	12.86	0.10
Imports	Mil MT	78.35	82.49	83.50	-1.50
Consumption	Mil MT	89.83	95.11	98.20	-1.22
--crushing	Mil MT	77.34	81.98	84.00	-1.20
--food	Mil MT	9.15	9.71	11.18
--seed	Mil MT	0.50	0.54	0.56
--loss & other	Mil MT	2.84	2.88	2.46	-0.02
Exports	Mil MT	0.14	0.13	0.18
Inventory change	Mil MT	0.53	-1.14	-2.02	-0.18

Soybean oil production for 2015/16 was adjusted downward due to a lower estimate of soybean imports, and the 2016/17 production estimate was reduced. MOA expects rapeseed imports to fall during 2016/17 as inspection and quarantine requirements are tightened.

China vegetable oils balance sheet (Min Ag, July 2016)
Item	Unit	2014/15	2015/16	2016/17	Change from last month
Production	Mil MT	26.12	25.28	25.28	-0.10
--Soy oil	Mil MT	14.01	14.62	14.92	-0.23
--Rapeseed oil	Mil MT	6.92	5.66	5.37	0.12
--Peanut oil	Mil MT	3.03	3.01	3.08
Imports	Mil MT	6.14	5.62	5.27
--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	0.65	0.58
Consumption	Mil MT	30.80	31.17	31.37	-0.01
--Urban	Mil MT	20.17	20.41	20.55
--Rural	Mil MT	10.64	10.76	10.83	0.01
Exports	Mil MT	0.14	0.12	0.13	0.02
Inventory change	Mil MT	1.31	-0.13	-0.96	-0.12

Cotton production has been adjusted upward slightly based on good rain and temperature in Xinjiang. Imports will be just 920,000 mt during 2015/16 and 950,000 in 2016/17, according to the MOA report, as China tries to unload its inventory of cotton. Cotton reserves will decline to 9.58 mmt at the end of 2016/17, down from their peak of 12.8 mmt at the end of 2014/15.

China cotton balance sheet (China Ministry of Agriculture, July 2016)
Item	Unit	2014/15	2015/16	2016/17	Change from last month
Beg. Inventory	Mil MT	12.40	12.80	11.41	-0.25
Area	1000 HA	4,219	3,433	3,100	33.00
Yield	KG/HA	1,460	1,514	1,530	20.00
Production	Mil MT	6.16	5.20	4.74	0.11
Imports	Mil MT	1.67	0.92	0.95	0.02
Consumption	Mil MT	7.40	7.24	7.50	0.38
Exports	Mil MT	0.02	0.02	0.03	0.01
End Inventory	Mil MT	12.80	11.66	9.58	-0.51

MOA adjusted sugar consumption downward by 100,000 mt due to rising sugar prices and falling prices of corn-based sweetener substitutes. 

China sugar balance sheet (Min Ag, July 2016)
Item	Unit	2014/15	2015/16	2016/17
Area	1000 ha	1579	1435	1433
--sugar cane	1000 ha	1457	1301	1270
--sugar beets	1000 ha	122	134	163
Yield	MT/ha	54.6	54.38	54.38
--sugar cane	MT/ha	61.8	60.75	60.00
--sugar beets	MT/ha	47.4	48.00	48.75
Sugar production	Mil. MT	10.56	8.70	9.90
--sugar cane	Mil. MT	9.82	7.85	8.85
--sugar beets	Mil. MT	0.74	0.85	1.05
Sugar imports	Mil. MT	4.81	3.50	3.50
Sugar consumption	Mil. MT	15.1	15.20	15.30
Sugar exports	Mil. MT	0.06	0.16	0.07
Inventory change	Mil. MT	0.21	-3.16	-1.97