Dim Sums: Agricultural Markets in China

China imported $73.2 billion of agricultural products during the first eight months of 2016--but that total was down 7.2 percent from the same period last year. The volumes of some grain and edible oil imports was down 20-to-30 percent, but pork and beef imports continue to surge due to high prices in China. The Ministry of Agriculture's analysis of the import data shows that grain imports during January-August 2016 totaled 15.9 million metric tons, down 30.8% from the same period in 2015. Imports of rice and wheat rose 18.9%, while imports of corn dropped 32.2%. Imports of corn substitutes dropped even faster: barley was down 59.2%, sorghum was down 29%, DDGS was down 44.1%, and cassava was down 28.7%. Cotton imports continued to shrink by 34.6%. Sugar imports were down 31.2%. China agricultural imports, January-August 2016 Commodity Imports Change from last year 1000 metric tons Percent Wheat 2,451 18.9 Rice 2,347 18....

China is a big meat-eater but it's due for an upgrade, according to a speech by the vice chairman of China's Meat Association earlier this month . The Ministry of Agriculture also has big plans for reshaping the country's vast network of pig pens. Earlier this month Chen Wei, an official with China's Meat Association, described China as big meat-producing country and a big market that accounts for a third of the world's meat, including half of the world's pork. (Statistics from the UN's Food and Agriculture Organization suggest China's share of meat is 27 percent). This share exceeds China's 18-percent share of the world's population, implying that the country's per capita consumption exceeds the world average. Meat association official speaks in front of Smithfield banner in Beijing. Mr. Chen expects China's consumption of meat to outpace its production over the next five years. He estimates that China's net imports of meat ...

Prices are falling as another big corn crop is harvested in China this month. This year there will be no floor under the price to catch it when it falls. A Futures Daily reporter visited Henan, Hebei, and Shandong Provinces to investigate corn market conditions. The corn crop looks big, the quality is good, and dry weather at harvest time has been favorable for bringing in the crop. Supplies in the market are already plentiful because the government has been auctioning large volumes of corn from reserves over the past two months. The newly-harvested crop will add to the supply pressure. The Futures Daily reporter learned from a trader in Henan Province's Minquan County that the local price is .76 yuan/500g (1520 yuan/metric ton, 13-15% moisture). He thought the corn price could fall to 0.7 yuan (1400 yuan/mt) as a greater volume of corn comes on the market. A government warehouse manager in Hebei Province told the reporter that some people say the price could fall to 0.65 yu...

China's agricultural sector was relatively weak during August 2016, according a monthly report on rural economic conditions by the Ministry of Agriculture . Agricultural prices are generally weak, livestock numbers are stagnant or declining, and growth in  rural migrant wages is slowing. The MOA report warns that pressure from slowing economic growth and pressure on businesses dims the outlook for the rural economy. China's agricultural prices rebounded in August from July, but they were still lower than a year ago. The index of wholesale prices for agricultural prices was down 4.3 percent from the same period last year, and the "market basket" price index (vegetables, fruit, meat, milk) was down 4.9 percent from a year ago. The two indexes increased 2.5 percent and 3 percent, respectively, from July to August. The MOA report warns of further downward pressure on farm prices as the fall harvest approaches. The early rice crop harvested this summer was estimated by...

The Agricultural Development Bank of China (ADBC) agreed to bankroll the Ministry of Agriculture's five-year rural policy blitz by committing to provide no less than 3 trillion yuan ($450 billion) in loans for agricultural modernization during 2016-2020. The funds were committed in a "strategic agreement" signed with the Ministry of Agriculture  September 18, 2016. Few specifics were announced. The two parties agreed to deepen rural reform, push forward stronger policies that benefit farmers and agriculture, upgrade agriculture, raise the efficiency and sustainability of agricultural development, in order to effectively accelerate agricultural modernization. Priorities were as follows: maintain national food security construct high-standard fields improve in agricultural structure promote innovation in agricultural science and technology and modernize the seed industry  foster new-type farm operators push forward sustainable agricultural development accelerate ...

More details about China's new subsidy for corn farmers were revealed by Liaoning Provincial authorities this month. The subsidy is slated to be given for the next three years. The payment will vary from county to county, is expected to be in the range of 120-to-180 yuan per mu, and cash will be distributed to farmers by October 31, 2016. The details are based on propaganda articles released earlier this month. According to one microblog , the province has not released the actual documents online. The corn producer subsidy will be paid to farmers in the provinces Liaoning, Jilin, Heilongjiang, and Inner Mongolia. The subsidy will be based on the area of land they plant in corn. The central government has allocated funds to the four provinces. The provinces then divide up the funds among prefectures and then to counties. The payment in each county will vary depending on the ratio of funds to area planted in corn. Liaoning's Agriculture Department estimates that the subsi...

Chinese nationalist netizens responded to a complaint about China's farm subsidies with invective about "shameless" American conspiracies. On September 13, U.S. Secretary of Agriculture Tom Vilsack and U.S. Trade Representative Michael Froman announced an enforcement action to challenge China's use of market price support for rice, wheat, and corn. A Chinese Commerce Ministry statement said support for agriculture is common international practice. As of today, Chinese netizens had posted 17 uniformly caustic comments about American intentions in response to a brief article reporting the U.S. action on the web site of Global Times , a nationalist-leaning newspaper published by the Chinese government. Here are the unvarnished opinions of Chinese observers and propagandists: "Grain is the most basic need. American dogs can control China by controlling its grain more easily than by using force." "China's farmers are in the weakest position. Am...

In its  September "China Agricultural Supply and Demand Estimates " China's Ministry of Agriculture reduced its estimates of the country's corn production and imports for the coming year, but an excess supply of over 8 million metric tons is still expected for the 2016/17 market year. Soybean imports were revised downward to 84 mmt for 2016/17 as sales of government stocks displace some imports and tepid livestock industry growth slows soybean meal demand growth. Corn prices in production regions are expected to fall to 1500-to-1650 yuan/mt during 2016/17, down from 1850-1880 yuan during 2015/16. China corn balance sheet (China Ministry of Ag, Sept 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 5,983 -27.00 Production Mil MT 215.70 224.58 215.43 -1.08 Imports Mil MT 5.52 4.60 ...

China's Heilongjiang Province announced a new pilot subsidy for farmers who rotate corn and soybeans . The subsidy is 150 yuan per mu (about $136 per acre). Eligible farms must have planted corn in 2015 and soybeans in 2016. The subsidy will be paid only to new-type farms that include large scale farms, family farms, and farmer cooperatives. The subsidy appears to be part of two Chinese initiatives. First is the overhaul of grain subsidies which combines three separate subsidies into a single payment and makes payments to both small-scale landholders and new-style farms that rent in land. Second is a structural adjustment initiative which hopes to address the surplus of corn and deficit of soybeans by inducing farmers to shift land from corn to soybeans. A related initiative seeks to break the continuous mono-cropping of corn that has become predominant in northeastern China and degrades soil fertility. The document announcing the subsidy offers no concrete details about how au...

How low will China's corn price go after new corn comes on the market? While the national "temporary reserve" policy for corn has been eliminated, there may be a flurry of micro-interventions to support corn prices and stockpile corn in other ways. Nevertheless, market players in China are expecting a sharp decline in prices after new corn comes on the market. An article circulating on Chinese web sites this week calls on local officials, state-owned enterprises, private companies, and individual brokers to make a coordinated effort to ensure that farmers are able to sell their corn this fall to ensure national food security and "harmonious stability." The article from something called "Farmer's Home" anticipates that China's corn market will have difficulty adjusting to the first year of "marketized" corn purchase because the cancellation of the floor price was announced too late for farmers to adjust their planting decisions. F...