Dim Sums: Agricultural Markets in China

Chinese officials are taking numerous measures to cushion farmers against declining corn prices as they begin the first marketing season in a decade without a formal price floor for the crop. As of October 23, 85% of corn had been harvested in Jilin and Heilongjiang Provinces, but only 5% had been sold. Rain and snow has slowed harvest and drying of the grain. An October 26 Jilin Province meeting on grain procurement raised concerns about uncertainties surrounding the corn harvest and laid out five priorities: make sure there are people to harvest grain make sure there is money to buy grain make sure there is space to store grain make sure there are people to buy grain make sure there are people to sell grain Officials worry that farmers may not bother harvesting their grain in a timely manner, leaving it in the field where it will turn bad. An October 28 circular on corn procurement and sales issued by Heilongjiang Province's grain bureau exhorted each l...

As China's corn marketing season is about to enter its peak period, there is some optimism about a recent rebound in prices, but others say declines in prices will resume. As of October 2, the corn harvest was 90-percent complete in Shandong Province and 70-percent complete in Henan. However, it was just 10-percent complete in Jilin Province in the northeastern region. The corn harvest will not be complete in the northeast until November. This is the first time in nine years that corn will be marketed without a "temporary reserve" price floor to act as a safety net. Chinese leaders appear committed to the free market approach to determining corn prices, but officials are leaning on companies, officials, and grain depots to make sure prices don't fall too fast, too far. Corn prices rebounded about 50-100 yuan per metric ton during late September and early October. While this rebound doesn't make up for the roughly 300-yuan decline in September, Futures Daily ...

China is trying out "new" approaches to supporting farmers that funnel money into "protected" traditional farming regions and establish government-bank partnership funds to support agribusinesses. The conceptual framework is laid out in an article, " Reasons for Our Country's Increase in Grain Imports and Countermeasures, " by a China Ministry of Agriculture task force published last year (and posted on the Ministry's web site this month). The article frets about the explosion of "grain" imports (which includes soybeans) and calls for a big boost in subsidies that are shoehorned into the rules on support imposed by World Trade Organization (WTO) rules. The authors call for ramping up "green box" spending on agriculture which is not limited by WTO rules. China's Ministry of Agriculture is establishing "protection regions" for selected crops based on the "geographic indicators" approach used in the Euro...

China's corn supply will exceed its consumption by 4 mmt during 2016/17, according to the October China Agricultural Supply and Demand Estimates  (CASDE) published by the Ministry of Agriculture. The estimated surplus is down from last month's estimate of 8 mmt. The CASDE report estimates that the corn surplus was a whopping 33.7 mmt during the just-completed 2015/16 and 37.8 mmt during 2014/15. CASDE cut its estimate of China's 2016/17 corn crop by 3 mmt due to poor yields and lodging in some parts of China's northeastern provinces. The estimate of 212.45 mmt for 2016/17 is down from 224.58 mmt for 2015/16. Imports were revised down to 3.2 mmt for 2015/16 and 1.8 mmt for 2016.17. CASDE has revised 2015/16 imports downward each month, from 4.6 mmt in July to 3.2 mmt in October, as de-stocking of corn from government stockpiles this summer displaced imports. The estimate of imports for 2016/17 has been adjusted down from 2.4 mmt during July-August to 2 mmt in Septembe...

Falling corn prices and a modest rebound in oil prices have brought China's fuel ethanol industry back from the brink of collapse. The industry has never lived up to its hype in China, but now some are calling for a big expansion as Chinese officials look for ways to use up "problem grain" stuffed in government warehouses. The Chinese ethanol industry's recovery is symbolized by COFCO Biochemical (Anhui)'s reported 12-million yuan profit for the first half of 2016, a huge reversal from its 323 million yuan loss last year. 2015 was a dark period for the Chinese ethanol industry. It faced a perfect storm of declining prices, rising raw material costs, and vanishing subsidies. The price of ethanol in China is fixed at 91.1% of the price of gasoline, so declining oil prices in 2014-15 drove down the price of ethanol. In other countries, the price of corn--the main raw material for ethanol in China--fell along with fuel prices. But the Chinese industry had rigidly...

On September 13, an entry point for imported pork was approved in Heilongjiang Province , allowing meat to be shipped directly from coastal ports hundreds of miles into China's interior regions. This is one of a flurry of entry points approved this month as Chinese authorities create infrastructure to support its new status as a meat importer. Heilongjiang's designated entry point is a 6000 square-meter facility 10 km west of Zhaodong City, a food processing hub about an hour's drive northwest of Harbin, the provincial capital. Meat can be shipped to Dalian or Tianjin ports and then transported directly to the Heilongjiang entry point in its original container for inspection and quarantine procedures. The facility reportedly has 1480 square meters of cold storage space integrated with refrigerated transport and warehouse capacity to store 3000 metric tons. This is one of four designated entry points for meat approved in September . Others are at Taicang and Suzhou in Ji...

"The safety of transgenic foods is not determined by an auntie next door; the determination is made by professional organizations through experimental trials," intoned the deputy head of Hainan Province's agricultural department on September 9, 2016. The official's remarks were made at the latest in a series of publicity events put on by Chinese agricultural officials to assure the public of the safety of transgenic agricultural products. The events are intended to ease consumer concerns about approval and wider dissemination of more transgenic crops in coming years. The assurances of scientific rigor were undermined ten days later when a former Chinese Academy of Agricultural Sciences graduate student posted allegations that an elite testing center for transgenic crops falsified years of records to pass an audit to renew the center's accreditation (Chinese version here ; Chinglish version here ; Wall Street Journal version ). A lab for testing feed and a...