MOA S&D Estimates May 2017

China's Ministry of Agriculture issued its May 2017 China agricultural supply and demand (CASDE) report which included the first estimates for the 2017/18 market year. The report shows a 2.9-percent decrease in corn production estimated for the 2017/18 crop to 213.19 million metric tons. The decline is mostly due to a 2.5-percent decrease in corn area planted.

China corn supply and demand (Ministry of Ag, May 2017)
Item	Unit	2016/17 Apr	2016/17 May	2017/18 May
Planted area	1000 ha	36,026	36,760	35,840
Harvested area	1000 ha	36,021	36,760	35,840
Yield	Kg/ha	5,978	5,973	5,948
Production	MMT	215.33	219.55	213.19
Imports	MMT	1	1	1
Consumption	MMT	210.72	210.72	215.07
--Food	MMT	7.82	7.82	7.89
--Feed	MMT	133.03	133.03	135.03
--Industrial use	MMT	58.25	58.25	59.75
--Seed	MMT	1.61	1.61	1.57
--Loss and other	MMT	10.01	10.01	9.83
Exports	MMT	0.5	0.3	0.3
Surplus	MMT	5.11	9.53	-1.19

However, the report failed to mention that it also raised its estimate of 2016/17 corn output to 219.5 mmt--2 percent higher than the estimate of 215.33 mmt it had reported for the last four months. Thus, the May estimate of the 2017/18 corn crop (213.19 mmt) is only 1 percent lower than last month's estimate of the 2016/17 corn crop (215.33 mmt).

With a higher production estimate for 2016/17, MOA's balance sheet now shows a 9.5-mmt increase in corn inventory for the current market year. MOA expects a small 1.2-mmt reduction in corn inventory during 2017/18--reflecting a 7-mmt decline in output and a 4-mmt increase in consumption.

The mysterious increase in the 2016/17 corn production estimate appears to reflect the CASDE authors' belated decision to adopt the National Bureau of Statistics estimate of 2016 corn output and sown area. The Ministry of Agriculture's estimate of corn output was 4-to-7 million tons less than the NBS estimate each month since last July. The lowest estimate was 212.45 mmt in October. The MOA estimate was 215.33 mmt each month from January to April. The MOA estimates remained lower than the NBS estimate after it was released in December--until this month. No other changes in the 2016/17 corn balance sheet were made this month.

MOA estimates that Chinese soybean area increased 10.4 percent this year, but the increase in soybean output anticipated for 2017/18 is only 1.5 mmt. Soybean imports are expected to rise by 3.7-mmt to 93.16 mmt in 2017/18. The 2016/17 import estimate was boosted nearly 3-mmt this month. They attribute the increase in soybean use during 2017/18 to recovery of swine production and the substitution of soybean meal for other oilseed meals. Food use of soybeans is estimated to grow 7.7 percent. MOA anticipates a decline in prices for both imported and domestic soybeans during 2017/18--spurred by falling international prices--while prices for other commodities are expected to be steady.

China soybean supply and demand (Ministry of Ag, May 2017)
Item	Unit	2016/17 Apr	2016/17 May	2017/18 May
Planted area	1000 ha	7,156	7,156	7,899
Harvested area	1000 ha	7,150	7,150	7,899
Yield	Kg/ha	1758	1758	1785
Production	MMT	12.57	12.57	14.1
Imports	MMT	86.55	89.45	93.16
Consumption	MMT	100.81	103.69	108.59
--Crushing	MMT	86.12	89.01	92.50
--Food	MMT	11.18	11.18	12.04
--Seed	MMT	0.61	0.6	0.6
Loss and other	MMT	2.9	2.9	3.45
Exports	MMT	0.2	0.14	0.22
Surplus	MMT	-1.89	-1.81	-1.55

The cotton balance sheet had only minor changes. MOA expects a small rebound in cotton output to 4.88 mmt in 2017/18. According to MOA, cotton producers in Xinjiang are more eager to produce after high net returns last year and stable expectations due to the announcement of the subsidy policy for the next three years. Imports will remain modest, at 1.1 mmt and consumption flat, at 7.59 mmt. MOA notes an acceleration of cotton imports during the first months of 2017 due to a shortage of good quality cotton. Cotton stocks will continue their decline from 9.23 mmt to 7.61 mmt during 2017/18.

China cotton supply and demand (Ministry of Ag, May 2017)
Item	Unit	2016/17 Apr	2016/17 May	2017/18 May
Begin inventory	MMT	11.11	11.11	9.23
Planted area	1000 ha	3,100	3,100	3,200
Yield	Kg/ha	1,523	1,523	1,523
Production	MMT	4.72	4.72	4.88
Imports	MMT	0.90	1.00	1.10
Consumption	MMT	7.59	7.59	7.59
Exports	MMT	0.01	0.01	0.01
End Inventory	MMT	9.13	9.23	7.61

The edible oils balance sheet includes modest increases in production for soybean, rapeseed, and peanut oils for 2017/18. MOA says vegetable oil supplies are tight despite the end of auctions of rapeseed oil from domestic reserves. Overall edible oil consumption will rise 0.5 percent during 2017/18 due to rising population and urbanization. The end of rapeseed oil de-stocking will prompt an increase in rapeseed oil imports. Domestic peanut oil production will rise due to high returns attracting an increase in domestic peanut output.

China edible oils supply and demand (Min Agriculture, May 2017)
Item	Unit	2015/16	2016/17 Apr	2016/17 May	2017/18 May
Production	MMT	25.3	26.11	26.3	26.85
--Soy oil	MMT	14.74	15.37	15.62	15.92
--Rapeseed oil	MMT	5.6	5.6	5.53	5.71
--Peanut oil	MMT	3.01	3.18	3.18	3.24
Imports	MMT	5.81	5.6	5.6	6.2
--Palm oil	MMT	3.39	3.25	3.25	3.75
--Rapeseed oil	MMT	0.77	0.75	0.75	0.85
--Soy oil	MMT	0.59	0.58	0.58	0.58
Consumption	MMT	31.17	31.43	31.46	31.63
--Urban	MMT	20.95	21.4	21.5	21.65
--Rural	MMT	10.22	10.03	9.96	9.98
Exports	MMT	0.12	0.13	0.13	0.13
Surplus	MMT	-0.18	0.15	0.31	1.3

The 2016/17 sugar production season is coming to a close. According to the text of the CASDE report statistics show a 5.1-percent increase in sugar cane production to 8.1 mmt (the table shows 8.2 mmt), and a 27.7-percent increase in sugar beet output to 1.05 mmt for 2016/17. MOA expects a further 13.5-percent increase in overall sugar output for 2017/18 due to strong plantings prompted by higher sugar prices. With the decline in corn prices this year, MOA sees a substitution toward corn sweeteners that will keep sugar consumption steady at 15 mmt. Imports for 2017/18 are also projected at 3.5 mmt, about the same as this year.

China sugar supply and demand (Ministry of Ag, May 2017)
Item	Unit	2015/16	2016/17 Apr	2016/17 May	2017/18 May
Planted area	1000 ha	1423	1349	1349	1472
--sugar cane	1000 ha	1295	1181	1181	1277
--sugar beets	1000 ha	128	168	168	195
Yield
--sugar cane	MT/ha	60.3	60	60	60
--sugar beets	MT/ha	53.85	52.5	52.5	52.5
Sugar output	MMT	8.7	9.25	9.25	10.47
--sugar cane	MMT	7.85	8.22	8.2	9.23
--sugar beets	MMT	0.85	1.03	1.05	1.24
Imports	MMT	3.73	3.5	3.5	3.5
Consumption	MMT	15.2	15	15	15
Exports	MMT	0.15	0.07	0.07	0.07
Surplus	MMT	-2.92	-2.32	-2.32	-1.1