Miller Magazine Issue: 152 August 2022

92 COUNTRY PROFILE MILLER / AUGUST 2022 China is expected to see stable grain production this year, despite challenges including rare autumn floods last year, sporadic resurgences of COVID-19 cases and drastic fluctuations in the global farm pro- duce market. CORN PRODUCTION Corn is China's most produced grain and the coun- try is the largest importer of the crop in the world. It is estimated that 75% of China's corn is used for animal feed. In its latest report released on 7th July, the U.S. Department of Agriculture’s (USDA) Foreign Agricultural Service (FAS) post in Beijing forecasts China’s corn production in MY2022/23 at 270 MMT, 1 percent less than last year, due to lower planted area. “The lower area for corn is the result of farm- ers reacting to the higher soybean subsidies vis-à- vis corn, which increases corn-soybean intercrop- ping.” Specifically for 2022, the soybean subsidy was 3 times the corn subsidy. MARA also predicts a reduction of MY2022/23 corn planting area at 42.5 million hectares, down 800,000 hectares. Howev- er, MARA forecasts an increase of 1.9 percent in corn production over MY 2021/22 due to favorable weather, better seed, and advanced technology. “ Industry forecasts MY 2022/23 production will de- cline 8-10 MMT, or 3 percent, from last year's levels.” Total corn consumption in MY2022/23 is forecast at 297 MMT, up 5 MMT from MY2021/22, as corn usage in feed rations increases to more normal lev- els and feed demand recovers. The forecast for MY 2022/23 feed and residual use is 216 MMT. “The corn-wheat price differential has returned to tradi- tional levels, with corn prices $75.8 per ton cheap- er than wheat in May, compared with $45.5 per ton more expensive than wheat in May last year. Many feed mills have reportedly stopped substituting wheat for corn. According to the China Feed Indus- try Association, corn usage in compound feed in- creased from 35.3 to 40.8 percent during the first four months of this year,” the report said. Since the beginning of the calendar year 2022, corn prices have remained stable but at high lev- els. The industry consensus is that the gap between China's corn demand and supply will persist for the foreseeable future. The availability of substitutes and imports is an important determinant of corn feed consumption. The processing sector (which includes ethanol, corn gluten meal, corn gluten feed, starch, and other processed products) is expected to remain stable in MY2022/23. China's total corn processing capacity in the Northeast provinces is approximately 65 MMT per year, but operation rates have averaged 60 to 70 percent over the past year. Starch industry oper- ation rates continue to decline, and the operation rate in April 2022 was down by 14.5 percent from April 2021 and 9.3 percent from March 2022. 1Indus- try sources said that grain processors in Shandong, Jilin, and Heilongjiang chose to lower or suspend production because of high corn prices, low de- mand, hindered logistics, and increased inventory.” CORN IMPORTS USDA’s Beijing post forecasts MY 2022/23 corn