Report Highlights: 

Corn shipments continue to be blocked due to detections of biotechnology events not yet approved in China, causing estimated MY2013/14 corn imports to fall to five million tons. Despite the fall in imports, corn ending stocks are predicted to reach near record levels due to record production and lower industrial demand.

Executive Summary:

MY2013/14 corn production is estimated at a record 217 million tons on better than average yields. MY2013/14 consumption is lowered to 213 million tons on lower industrial demand, while ending stocks are projected to reach their highest level in over a decade. Estimated corn imports are lowered to five million tons as China continues to reject corn shipments over biotechnology events that have not yet been approved in China. At the same time, China announces a new policy direction for food security that may increase corn imports in the long run. MY2013/14 rice imports are lowered 200,000 tons to 3.2 million tons based on less competitive international prices. Wheat estimates remain unchanged.



MY2013/14 corn production is estimated at 217 million tons, a record high, based on new data from the National Grain & Oil Information Center (NGOIC). The increase from post’s last estimate is mainly due to reported better than average yields. While on the ground reports support higher production estimates, it is difficult to account for the full seven million ton increase shown in official data. Provincial governments receive incentives and awards for increasing grain production, and so may be tempted to overstate production. NGOIC has reported increased or stable production every year since 2003.


MY2013/14 overall consumption is estimated at 213 million tons, down three million tons from the previous estimate due to reduced industrial use, such as starch, ethanol and alcohol. Estimated feed consumption is unchanged.

In November 2013, the government announced a subsidy to encourage end-users in southern China to purchase corn from surplus producing areas in the northeast. Licensed grain trading companies purchasing corn from designated production regions, include Liaoning, Jilin, Heilongjiang and Inner Mongolia, are eligible to receive a subsidy of RMB 140 per ton for deliveries made by the end of June 2014. The policy is designed to address the recurring challenge of convincing animal feed operators clustered in southern China to buy high-priced domestic corn from surplus producing regions located thousands of kilometers away in the northeast.


Corn imports for MY13/14 are now estimated at five million tons, two million tons lower than post’s last estimate, due to continued trade disruptions. Beginning in November 2013, China began rejecting shipments of imported corn due to detections of biotech corn variety MIR 162, which is not yet approved in China. Faced with these challenges, many traders chose to reroute shipments headed to China to other markets. Some traders have canceled shipments altogether, while others have delayed contracts in hope that the Ministry of Agriculture will approve MIR 162 before the end of the marketing year. However, there has been no indication that this situation will be resolved quickly. China’s slow and unpredictable biotechnology regulatory system, combined with a lack of a low level presence policy for unapproved biotechnology events, has created a challenging environment for agricultural imports that is likely to persist or worsen.


MY2013/14 ending stocks are estimated at 76.5 million tons, the highest in over a decade. Although grain stock data is a state secret in China, more than half of the reserves are estimated to be state held. During an annual meeting in January 2014, the State Grain Administration stated that China’s grain stocks were at “a relatively high level in history.” The government is reportedly building more storage capacity to support its minimum price purchase program. The minimum support purchase price for corn in MY2013/14 is RMB 2,240 per ton, up 120 RMB from the previous year.


Wheat estimates are unchanged.


Production and consumption estimates are unchanged. MY2013/14 rice imports are estimated at 3.2 million tons, 200,000 tons lower than the previous estimate. Trade contacts reported a slowdown in rice sales to China in the second half of 2013 due to higher rice prices in Vietnam and Thailand.

Grain Security Policy

In December 2013, President Xi Jinping announced a tightly coded, but highly consequential, change to China’s food security policy. China will now only attempt to maintain “basic” self-sufficiency in corn, and allow for an “appropriate” level of imports. Ensuring overall food security was identified as the number one economic task for the government in 2014. This policy change was cemented in a “Number One Document” issued by the Chinese Communist Party Central Committee on January 19, 2014. Such documents are so called because they are the first policy document of the year, and are reserved for the highest priority policy issues.

The new policy maintains goals to achieve complete self-sufficiency in grain for food use (primarily wheat and rice), but allows for increased corn imports to meet growing feed demand. Existing minimum support price and reserve programs will be maintained for wheat, corn and rice. While these programs help to boost farmer income and production, they cause domestic prices to regularly exceed international prices.

High level documents and statements such as these are important indicators of the future direction of Chinese government policy. However, they should be viewed as broad statements of intent and will not necessary quickly result in concrete changes to regulations or trade barriers