China's higher grain crop may cut imports

Favorable winter-weather conditions in parts of China this past year may produce a higher grain crop and cut the country's grain imports by almost 20 percent, according to a United Nation report.

China may produce 555.537 million metric tons of grain this year compared to 541.831 million tons in 2012, which could reduce grain imports by 17 percent during the 2012/13 marketing season, according to the report by the UN Food and Agriculture Organization.

"[These predictions are] lower primarily because of record domestic production," Abdolreza Abbassian, senior economist for the FAO, told China Daily.

China's corn imports are expected to fall to 3.5 million tons, down 33 percent compared to the 2011-12 marketing year, which runs October to September for the crop, according to the report. This is seen as mainly a reaction to significantly raised corn prices due to drought in the US.

US corn exports have been in decline since the 2009-10 marketing season. By 2012, the US lost out to Brazil for the title of world's largest corn exporter.

US farmers will plant 97.3 million acres of the crop - the most since 1936 - to take advantage of high prices brought on by last year's drought, the worst since the Dust Bowl in the 1930s, the USDA said.

As of May 5, US farmers had sown only 12 percent of their corn goal, compared to an average of 47 percent reached by that date over the years, according to the USDA.

Farmers would have to work around the clock just to reach a planting rate of 40 percent by May 12.

A lot can't be done to fight drought-related issues in the US, according to Bruce Scherr, chairman and CEO of Informa Economics Inc , an agribusiness analytics firm.

"Last year's drought and high feed grain prices have stimulated increased investment in irrigation wells and equipment in some areas that traditionally have not depended much on irrigation," Scherr said. Those areas include parts of Tennessee, Kentucky and Illinois.

Those actions help increase production, but they aren't likely to represent a major solution for drought-stricken areas, according to Scherr.

US corn production reached a six-year low in 2012 with 10.8 billion bushels and yields reached a 17-year low with 123.4 bushels per acre. Farmers filed a record $11.8 billion in crop-insurance claims and farm income fell by 3 percent in 2012 from a record set in 2011, according to the USDA.

This year, persistent spring rain in the Midwest has slowed planting, and cold weather has delayed crop development, persuading some farmers to hold off planting for the time being.

"At the moment, the grain markets are more focused on it being too wet to plant in parts of the Corn Belt and the Northern Plains than on prospects of expanding drought conditions in the months ahead," Scherr wrote.

"There normally is at least some rainfall during drought periods," Scherr wrote. "The timing and distribution of that moisture during the growth cycle can have a great bearing on yields for all crops."

Predicting crop markets every year requires a lot of guessing, according to Gary Blumenthal, head of agricultural consultancy World Perspectives Inc in Washington.