China's grain data for 2024: output 'at a new level'

China's grain output "reached a new level" in 2024 as it surpassed 700 mmt for the first time, according to a Chinese official explaining this year's grain data. Production rose 1.3 percent to 706.5 million metric tons (mmt) in 2024. The area planted in grain crops increased by 0.3% and average yield increased 1.3 percent in 2024 according to data released December 13. 

Corn was the driver of China's growth in grain output as it has been for many years. According to the Statistics Bureau's communique on 2024 grain output, corn production reached a record 294.92 mmt in 2024, well above the output of rice (207.54 mmt) and wheat (140.1 mmt). Corn output rose 6.1 mmt this year (up 2.1 percent) and wheat output rose 3.5 mmt, as the two crops accounted for most of the 11.1-mmt increase in grain output. Rice output rose 900,000 metric tons and soybean output declined 200,000 metric tons. Production of early-season rice fell 600,000 metric tons, probably due to summer floods in southern provinces.

Source: China National Bureau of Statistics.

Corn also accounted for nearly all of the increase in area planted in grain during 2024, with an increase of 521,800 hectares (+1.2 percent). Rice area rose 57,800 hectares, including a 21,700-hectare increase in early rice. Wheat area fell 39,800 hectares. Soybean plantings fell 140,700 hectares as Xi Jinping's campaign to boost soybean self-sufficiency seems to have faltered. 

Source: China's National Bureau of Statistics.

Wheat accounted for most of the improvement in grain yield as growing conditions were favorable for the winter wheat crop. Wheat yield increased by 158.6 kg-per-hectare (+2.7%). Early rice was the only grain crop with a decline in yield. 

Source: China National Bureau of Statistics.

Corn's dominance of grain output growth continues a long-term trend. Corn output grew at a frantic pace from 2004 until a massive corn glut was built up during 2012-15. A "supply side structural adjustment" during 2016-20 to alleviate the glut interrupted the growth. Corn output growth was resumed since 2020. Rice output seems to have plateaued and wheat is growing at a moderate pace. Soybean output is stuck around 20 mmt. 

Source: Data from China National Bureau of Statistics.

The National Bureau of Statistics official explained that this year's bumper harvest was due to officials preventing loss of arable land, averting impacts of natural disasters, and the central communist party leadership's support for grain output: raising the minimum prices for wheat and rice, paying grain producers an "arable land fertility protection" subsidy, corn, soybean and rice producer subsidies, improving a full-cost insurance and income protection insurance program, an agricultural input price stabilization program, "comprehensive land governance", and expansion of summer crop planting to maximize the potential area planted in grain. Based on the official's explanation, the objective of the soybean producer subsidy seems to have quietly shifted from increasing soybean self-sufficiency to keeping soybean area planted stable at 10 million hectares or more. 

The official attributed good yields to good sunlight and moisture in grain-producing regions despite floods, droughts, and typhoons. He credited the "high standard field construction" program, and an action plan to raise yields through increased planting density, combining fertilizer application with irrigation, and a program that combines a growth-promoting spray with herbicide and pesticide applications. 

The official began his explanation by crediting Xi Jinping's guidance for record grain output and concluded by explaining the grain output figures support Xi's priorities. A shorter description of the grain data and the official's explanation were also featured on page 1 of the December 14 Peoples Daily. According to the Statistics Bureau official, China's record grain output contributes to national food security, global food security, stabilizes the world grain market, and lays a foundation for China's status as an agricultural power. Grain production advances rural revitalization, drives "high quality development" and puts economic recovery on a good trend, the official said. 

China's CPI hides big price drops for some items

 China's November Consumer Price Index was up 0.2 percent. The food component was up 0.9 percent, but that number hides a lot of big price declines for agricultural goods further up the supply chain. The table below compares year-on-year changes in select food categories from the November CPI report with year-on-year price changes calculated from several other November price data reports from China. 

For example, the CPI reported a 1.1 percent decline, but other data sources reported 18 and 19-percent declines for wheat, a 17 percent decline for flour, and price declines of as much as 4-to-6 percent for rice. 

Beef prices are down 13.5 percent in the CPI and down 18.3 percent in the Ministry of Agriculture's wholesale price report. Milk prices are down 1.4 percent from last year in the CPI, but raw milk is down 15.2 percent according to the agriculture ministry's wholesale price data.

Apples and potatoes are down about 10 percent from last year. 

The main components of animal feed were down by double-digits. Corn prices were down 18-to-21 percent and soybean meal was down 24-to-26 percent from a year ago. 

In contrast, pork prices are up about 14 percent from their depressed level of a year ago in the CPI and in wholesale price databases (but still below their level from November 2022) as many producers have cut back on production capacity after financial losses last year. With higher pork prices and lower feed prices many pig farms are seeing a reverse of last year's steep losses. 

Vegetables are another item with higher prices this year. The CPI vegetable component was up 10 percent from a year ago, probably reflecting the impact of summer flooding. According to MySteel agricultural price reports, garlic and chili peppers are up more than 20 percent and ginger is up 16.5 percent from last year. 

The declines in many prices reflect weak demand, the influence of sinking global prices for many agricultural commodities, and a deflating economy. The declines are consistent with anecdotal reports from China of food bargain-hunting, popular cut-price buffets, and more cooking at home to save money.

China's relentless soybean crushing build-out drives imports

China keeps building more soybean processing capacity, driving its demand for soybeans ever higher and undermining Xi Jinping's dream of reducing dependence on imported soybeans. 

An article issued by Shanghai-based Mysteel agricultural commodities last month reported that China's soybean crushing capacity increased from 120 million metric tons (mmt) to 140 mmt over the past 10 years. 

A similar article chronicling China's soybean crushing expansion that appeared in 2022 said 10 to 15 soybean crushing facilities with 60,000 metric tons per day were planned for completion between 2022 and 2025. The ones completed have contributed to the expansion reported above. With more scheduled for completion, the Mysteel article predicts that capacity will grow further in the next 2 years. 

The massive build-out of capacity--from 10 mmt in 2000 to 140 mmt now--powered China's emergence as the world's dominant soybean consumer. 

USDA's PS&D estimates show that China was already the world's biggest soybean crusher 10 years ago (in market year 2014/15). That year China consumed 74.5 million metric tons,46-percent more than the amount crushed by the United States. For 2024/25 USDA estimates China will crush 103 million metric tons, 57 percent more than the U.S. China's 28.5-million-metric-ton increase over the past decade is close to the increase in crush by the United States and Brazil combined. The combined increase in crush over 10 years by the other 7 countries in the top 10 was less than 10 mmt. 

If the Mysteel capacity numbers are correct, China was using only 62 percent of its crushing capacity in 2014/15, yet crushers felt the need to add 20 mmt of new capacity over 10 years. The numbers imply that China will utilize 74 percent of its crushing capacity this year. 

The Mysteel article reports capacity utilization for China's soybean crushing industry fluctuating between 55% and 70%, and just 42% for the first 10 months of 2024. The Mysteel author describes the industry as suffering from excess capacity. (The lower utilization is only partly explained by a divergence between USDA and official Chinese crush estimates: China's Ministry of Agriculture's CASDE has a 17.6-mmt increase in soybean crush over 10 years from 77.3 mmt to 94.9 mmt in 2024/25.)

A separate article posted on multiple sites in 2022 reported that crush capacity was 174 mmt with a utilization of 54%. That article described the industry as suffering from serious excess capacity.

China has hundreds of crushing facilities built mainly at ports and rivers for cheap and easy access to imported soybeans. According to last month's Mysteel article the regional layout has been stable with 85% of capacity in coastal provinces ranging from the Bohai Gulf region in the north to the southern coast. The largest concentration of soybean crushing facilities are in the provinces of Shandong, Jiangsu, and Guangdong. Only 15% of capacity is inland, along the Yangtze River and in big pig-producing southwestern provinces of Sichuan and Yunnan.

Created from data in Mysteel agricultural commodities article.

The Mysteel article says it excludes capacity that has been idled for a long time. It appears to also exclude crushing capacity in Heilongjiang Province. The 2022 article reported that most of the Heilongjiang crushing capacity--meant for processing domestic soybeans--had been idled or switched to manufacture soy-based food products like tofu. The 2022 article implied that only 1 mmt of domestic soybeans were crushed to produce oil and soybean meal during 2021/22. 

Control of China's crushing capacity is almost equally split among Chinese state-owned companies (38% of capacity), Chinese private companies (32%) and multinational companies (30%). The top companies have all been adding crushing capacity for imported soybeans aggressively, but state-owned companies (SOEs) have led the way. 

The leading share of crushing capacity held by state-owned companies (SOEs) dates back to a 2008 campaign to dilute multinationals' share of soybean crushing by bankrolling SOEs COFCO and Jiusan to acquire other companies--smaller private crushers, Singapore's Noble Agri, and another SOE called Chinatex--and to build more than 10 new crushing facilities at coastal and river ports. At the end of 2021 there were 41 SOE crushing facilities, 41 private crushers, and 33 foreign-invested crushing facilities. 

A posting on Baidu.com said COFCO had 20% of capacity, while SOEs Sinograin and Jiusan each had 9% of crushing capacity. Singapore-based Willmar was the largest multinational with 11% of capacity.

The bottom line is that different tentacles of the Chinese State are working at cross-purposes in the soybean sector. 

Supreme leader Xi Jinping has decreed an increase in soybean self-sufficiency by ordering agricultural officials to subsidize and expand domestic soybean output and to convince feed mills to substitute alternative feeds for soybean meal. 

Meanwhile, state-owned companies continue building crushing capacity for imported soybeans. And imported soybeans have been getting cheaper, keeping the facilities among the few profitable businesses in China this year. The need for an ever-increasing flow of imported soybeans to utilize the capacity, cover the fixed costs and pay debts incurred to build the facilities ultimately undermines Xi's goal of reducing reliance on imported soybeans.