CASDE January 2017

China's Ministry of Agriculture made only very minor changes in its supply and demand balance estimates for the January 2017 China Agricultural Supply and Demand Estimates (CASDE) report.

For corn, the 2016/17 harvested area and yield were adjusted upward slightly and the increase in stocks was adjusted upward accordingly. The CASDE authors say some corn blown over by storms was actually harvested and some corn performed better than expected in the late growing stage. They emphasize that 2016/17 corn production is still at a historically high level even though it is down from 2015/16. CASDE expects corn stocks to increase in 2016/17 by 5.1 mmt. For soybeans, a slight increase in seed use is incorporated to reflect an increase in soybean plantings this year.

China corn supply and demand (Ministry of Ag, Jan 2017)
Item	Unit	2015/16	2016/17 Dec.	2016/17 Jan
Planted area	1000 ha	38,117	36,026	36,026
Harvested area	1000 ha	38,117	36,016	36,021
Yield	Kg/ha	5,892	5,960	5,978
Production	MMT	224.58	214.65	215.33
Imports	MMT	3.2	1.0	1.0
Consumption	MMT	194.05	210.72	210.72
--Food	MMT	7.65	7.82	7.82
--Feed	MMT	121.01	133.53	133.53
--Industrial use	MMT	54.17	57.75	57.75
--Seed	MMT	1.66	1.61	1.61
Loss and other	MMT	9.56	10.01	10.01
Exports	MMT	0.01	0.5	0.5
Surplus	MMT	33.73	4.43	5.11

Perhaps the most interesting aspect of the report is that MOA has not adopted official National Bureau of Statistics estimates of 2015 corn production and area published in the Bureau's 2016 China Statistical Yearbook (released several months ago and now available on the web site). The MOA report still contains preliminary 2015/16 NBS corn estimates from the Statistical Abstract released in May 2016. The difference in the numbers is tiny and inconsequential, so this probably reflects MOA's lack of attention to detail rather than disagreement with the NBS numbers. More significantly, MOA has not adopted the NBS estimates of corn production, area, or yield for 2016/17 that were released in the NBS communique on grain production released last month. MOA has a larger decrease in corn area and corn production than NBS's number, which may reflect MOA's confidence in the Ministry's structural adjustment program to reduce corn in 2016. MOA's 2016/17 corn yield is 5 kg higher than NBS's. MOA estimates 2016/17 corn output at 215 mmt, but NBS estimated 219.55 mmt.

MOA's estimate of domestic corn prices was kept steady at 1500-1650 yuan/mt. However, the latest reports on the MOA web site say the average price at ports in northeast China has fallen to 1470-1480 yuan. Prices in Heilongjiang have fallen below 1400 yuan. The price at southern ports is in the range of 1560 to 1620 yuan /mt ($226-$235).

MOA estimates corn imports at 1 mmt for both 2015/16 and 216/17. Corn imports have slowed to a trickle since June 2017. Nearly all corn imports since June have been small border trade shipments from Laos and Myanmar. There have been only a few small shipments of corn from the United States and no Ukraine shipments since August.

Interestingly, CASDE's 2016/17 soybean import estimate of 85.3 mmt nearly matches its estimate of crushing use. Its estimate of domestic production (12.5 mmt) plus the drawdown of stocks (-2.2 mmt) almost matches the sum of food (11.18 mmt), seed (.61 mmt) and loss (2.48 mmt). This implies a bifurcated market in which nearly all crushing demand is met by imports and (nearly?) all food processing use is met by domestic soybeans.This may explain why such a differential between domestic soybean prices (4450-4650 yuan/mt) and imported soybean prices (3250-3450 yuan/mt) can persist--domestic soybeans get a 35-37 percent premium because they are non-GMO and for food use.

China soybean supply and demand (Ministry of Ag, Jan 2017)
Item	Unit	2015/16	2016/17 Dec	2016/17 Jan
Planted area	1000 ha	6,590	7,156	7,156
Harvested area	1000 ha	6,590	7,150	7,150
Yield	Kg/ha	1,762	1,748	1,748
Production	MMT	11.6	12.5	12.5
Imports	MMT	83.23	85.31	85.31
Consumption	MMT	96.67	99.72	99.77
--Crushing	MMT	82.89	85.50	85.50
--Food	MMT	10.35	11.18	11.18
--Seed	MMT	0.54	0.56	0.61
Loss and other	MMT	2.89	2.48	2.48
Exports	MMT	0.11	0.20	0.20
Surplus	MMT	-1.9	-2.1	-2.2

China cotton supply and demand (Ministry of Ag, Jan 2017)
Item	Unit	2015/16	2016/17 Dec	2016/17 Jan
Begin inventory	MMT	12.8	11.11	11.11
Planted area	1000 ha	3,267	3,100	3,100
Yield	Kg/ha	1,510	1,523	1,523
Production	MMT	4.93	4.72	4.72
Imports	MMT	0.96	0.90	0.90
Consumption	MMT	7.54	7.54	7.54
Exports	MMT	0.02	0.01	0.01
End Inventory	MMT	11.13	9.18	9.18

China edible oils supply and demand (Min Agriculture, Jan 2017)
Item	Unit	2015/16	2016/17 Dec	2016/17 Jan
Production	MMT	25.3	25.79	25.85
--Soy oil	MMT	14.74	15.16	15.16
--Rapeseed oil	MMT	5.6	5.55	5.61
--Peanut oil	MMT	3.01	3.18	3.18
Imports	MMT	5.81	5.55	5.65
--Palm oil	MMT	3.39	3.20	3.3
--Rapeseed oil	MMT	0.77	0.80	0.8
--Soy oil	MMT	0.59	0.58	0.58
Consumption	MMT	31.17	31.41	31.41
--Urban	MMT	20.41	20.8	20.8
--Rural	MMT	10.76	10.61	10.61
Exports	MMT	0.11	0.13	0.13
Surplus	MMT	-0.17	-0.20	-0.04

China sugar supply and demand (Ministry of Ag, Jan 2017)
Item	Unit	2015/16	2016/17
Planted area	1000 ha	1423	1433
--sugar cane	1000 ha	1295	1270
--sugar beets	1000 ha	128	163
Yield
--sugar cane	MT/ha	60.3	60
--sugar beets	MT/ha	53.85	52.5
Sugar output	MMT	8.7	9.9
--sugar cane	MMT	7.85	8.85
--sugar beets	MMT	0.85	1.05
Imports	MMT	3.73	3.5
Consumption	MMT	15.2	15
Exports	MMT	0.15	0.07
Surplus	MMT	-2.92	-1.67