Highlights

In spite of China's economic growth slowdown, Chinese feed demand remains strong. Swine numbers are forecast to recover and poultry production is forecast slightly higher in MY2016/17 and MY2017/18. 2016 has also been a dynamic year for Chinese agricultural policy and market prices. The Central Government has abandoned price support policies for all commodities except wheat and rice. Several new Central and Provincial Government reforms for corn and other feed grains have started liquidation of government surpluses through auctions and processor subsidies, tightened market access for cheaper imports, and ended China's long-standing price policy supports.

Executive Summary

In spite of China's economic growth slowdown, Chinese feed demand remains strong. Swine numbers are forecast to recover and poultry production is forecast slightly higher in MY2016/17 and MY2017/18. 2016 has also been a dynamic year for Chinese agricultural policy and market prices. The Central Government has abandoned price support policies for all commodities except wheat and rice. Several new Central and Provincial Government reforms for corn and other feed grains have started liquidation of government surpluses through auctions and processor subsidies, tightened market access for cheaper imports, and ended China's long-standing price policy supports.

On March 28, 2016, Liu Xiannan, Director of the Economy and Trade Office of the National Development and Reform Commission (NDRC), announced that the temporary reserve policy in North East provinces and Inner Mongolia will be replaced by a new mechanism of “marketized purchases" Based on the Chinese Agriculture Minister Han Changfu's public speech, “By 2020, corn acreage should stabilize at 500 million mu (82.3 million acres), down by 50 million mu (8.2 million acres) from 2015 level." On September 22, 2016, China's Grain Bureau announced the “North East Corn Purchase Policy" to normalize domestic supply and demand market mechanisms.

On October 20, 2016, Han Changfu, Minister of Agriculture of the People's Republic of China released an implementing measure of the “China Agricultural Modernization Plan 2016-2020," the 13th Five Year Plan for agriculture. The document focuses on improving national agricultural productivity through scientific innovation and technology, a nationwide agricultural extension system, and the development of agricultural institutions for agricultural finance, insurance, commodity trading, and logistics, while also improving rural economic development, environmental sustainability, and farmer welfare. By 2020, the government aims to push agricultural modernization forward, guarantee national food security, enhance food safety, raise China's international agricultural competitiveness, and raise the standard of living for farmers across rural China. The 13th Five Year Plan aims to continue and improve the rice and wheat minimum purchase price policy. Forecast MY2016/17 corn consumption is revised up 8 million tons to 234 million tons on higher feed and Food, Seed, and Industrial (FSI) use. Forecast MY2016/17 corn imports are cut 2 million tons to 1 million tons due to diminishing price competiveness for imported supplies as domestic and imported corn prices rapidly converge. Industry sources claim that corn imports will continue in MY2016/17, but volumes will fall to low levels. MY2016/17 corn exports are forecast unchanged at 0.03 million tons.

Total wheat consumption in MY2016/17 is revised up 5 million tons to 122 million tons based on higher feed use and post-harvest loss. Forecast MY2016/17 wheat imports are projected 0.5 million tons higher forecast at 4 million tons, due to tight supplies of high-quality wheat for the expanding milling-and-baking sector. On October 15, 2016, the NDRC announced the 2017 tariff-rate quota (TRQ) for wheat at 9.6 million tons,for corn at 7.2 million tons, and for rice at 5.3 million tons, unchanged from 2015. From late August to the end of September 2016, multiple strong typhoons accompanied by torrential rain and strong winds impacted one-half of the major rice growing areas in South Central China. In this region, during the storm season, second-crop rice was between the grain-filling stage of development and full maturity. The MY2016/17 consumption forecast is unchanged at 144 million tons.

Imports of barley and sorghum for feed have fallen in the face of diminishing price competitiveness with domestic corn supplies. Imports of Dried Distiller's Grains with Solubles (DDGS) have slowed to a trickle in response to the recent announcement of anti-dumping duties and the preliminary determination of countervailing duties on U.S. DDGS exports.

Grain Policy, Subsidies, and Trade Action

On March 28, 2016, Liu Xiannan, Director of the Economy and Trade Office of the National Development and Reform Commission (NDRC), announced that the temporary reserve policy in North East provinces and Inner Mongolia will be replaced by a new mechanism of “marketized purchases. The temporary reserve policy will be supplanted by a series of Central Government and provincial policies to encourage domestic disposal of excess stocks through state auctions, processor subsidies, and tightening feed import regimes. Despite government assistance, many Chinese producers continue to face significantly higher production costs than the global average. Post expects that producers will begin shifting from corn production to sorghum or cash crops. In extreme cases, producers may plant crops with lower cost inputs such as soybeans and accept lower revenue.

On September 22, 2016, China's Grain Bureau announced the “North East Corn Purchase Policy" to normalize domestic supply and demand market mechanisms. The policy will implement looser farm credit, local government loan guarantees for buyers, and improved access to drying, handling, and storage equipment. For corn growers approved by the State Council, there are about RMB 30 billion ($4.5 billion) allocated for distribution to the North East region. The new subsidy ranges from RMB 134 to RMB 150 per mu (0.1647 acre) based on actual seeding acreage in the new production year. See the table below for the changes to the North East subsidy based on acreage.

At the local and provincial levels, North East provinces are developing new policy packages to liquidate corn stocks from state grain reserves. In the fall of 2015, Jilin, Heilongjiang, and Inner Mongolia provinces proposed transfers of direct cash subsidies ranging from $25 to $55 per ton to processors purchasing corn directly from state grain reserves. In early September 2016, industry experts indicated that the Central and Provincial Governments plan to allocate RMB 3 billion for this program. Eligible end-users benefiting from the subsidy include feed mills as well as corn starch, corn glucose, corn oil, and ethanol processors. Industry sources estimate the new subsidy will be slightly lower than last year at around $25 to $28 per ton. On October 27, 2016, Jilin province was the first in the North East region to officially announce the new processor subsidy program. The policy stipulates that processors purchasing corn from local provincial stocks between November 1, 2016 and April 30, 2016 are eligible for a $30 per ton processor subsidy.

The Central Government will maintain support policies for producers for wheat and rice. However, these grains face the same challenges as corn. Mounting surpluses, pressure from cheaper imports, concerns about lagging productivity, and environmental deterioration are forcing China to structurally reform the agricultural subsidy model that it has developed over the past decade.

On October 20, 2016, Han Changfu, Minister of Agriculture of the People's Republic of China released an implementing measure of the “China Agricultural Modernization Plan 2016-2020," the 13th Five Year Plan for agriculture. The document focuses on improving national agricultural productivity through scientific innovation and technology, a nationwide agricultural extension system, and the development of agricultural institutions for agricultural finance, insurance, commodity trading, and logistics, meanwhile also improving rural economic development, environmental sustainability, and farmer welfare. By 2020, the government aims to push agricultural modernization forward, guarantee national food security, enhance food safety, raise China's international agricultural competitiveness, and raise the standard of living for farmers across rural China. The 13th Five Year Plan aims to continue and improve the rice and wheat minimum purchase price policy.

Central and Provincial Governments support modernization of Chinese grain production through the purchase of state-of-the-art agricultural machinery. In wealthier provinces in China, such as Zhejiang province, equipment buyers receive subsidies of up to 60 percent from the Central government and an additional 20 to 30 percent from Provincial authorities. However, due to small farm area, predominantly state-owned agricultural enterprises, custom harvesting operators, and investor-supported farming operations are the principle buyers of agricultural machinery.

As outlined in its 13th Five Year Plan, China is shifting away from its long-standing national reserve policy for corn, soybeans, and cotton. The country is instead promoting a greater set of risk management tools for its farmers and ranchers such as crop insurance, or as it is commonly referred to in China as “agricultural insurance." Chinese government estimates that since the 1990s severe weather and disasters have caused, on average, annual economic losses of nearly $25 billion. Since 2000, China has administered a pilot program for agricultural insurance for 15 crops ranging from staple grains, sugarcane, oilseeds, livestock, and tropical crops. Today, China administers the world's second largest crop insurance program after the United States. In 2015, the agricultural insurance premium volume in China was estimated at $5.59 billion. In China in 2015 agricultural insurance coverage included approximately 100 million hectares and about 70 percent of all corn, wheat, and rice production.

The Central Government encourages insurance program participation through regulation, a 30 to 60 percent premium subsidy, outreach efforts, and reinsurance. Recent reforms have allowed greater flexibility for local governments to supplement program coverage by offering a greater range of policies for specialty crops, such as apples or tea, and additional premium subsidies. However, much like the early development of the U.S. Federal Crop Insurance Program, China faces many of the same issues of rate-setting, private sector cooperation, and outreach. On September 23, 2016, China's Ministry of Commerce (MOFCOM) announced it is imposing anti-dumping (AD) duties on imported DDGS from the United States by requiring importers to pay cash deposits to Chinese customs of 33.8 percent.

Five days later, MOFCOM released its preliminary determination for its countervailing duty (CVD) investigation of imports of DDGS from the United States. Based on the preliminary determination, companies that participated in the sample investigation will pay preliminary duties in form of safety deposit to Chinese Customs authorities from ranging from 10 to 10.7 percent as countervailing duty combined with 33.8 percent as anti-dumping duty instead of 5 percent in the past. The 13 percent Value-Added Tax (VAT) will also apply in addition to AD import duty and the CVD import duty. These anti-dumping duties on DDGS are helping the Chinese government to manage lower volumes of alternative feed imports.

Transportation and Logistics

Chinese authorities are considering a transportation subsidy for shipments of grain from North East China to Southern China. Recent Central Government also suggest that outbound grain shipments from North East China will receive priority access to facilitate grain distribution capacity. In recent months, increased inspections scrutiny of truck tonnage has limited overland transportation capacity and raised freight rates for hauling grain from North East China.

Foreign Exchange and Market Developments

The Chinese Yuan (CNY) – U.S. Dollar (USD) exchange rate has reached its lowest point in more than eight years. The strong appreciation of the USD in recent months accelerated in November, raising commodity prices in Chinese markets for agricultural and non-agricultural commodities. The China Securities Regulatory Commission (CSRC) has implemented new margin trading rules and transaction fees to curb excessive speculation and price manipulation. Futures markets for commodities have attracted highly leveraged speculative traders, exposing end-users and commercial hedgers to considerable risk. The Dalian Commodity Exchange will add three delivery points for futures contracts in Suihua, Heilongjiang province; Songyuan, Jilin province; and Tongliao, Inner Mongolia, in addition to its main delivery point in Liaoning province for new crop corn future contracts settlement starting in September 2017.

WHEAT PRODUCTION

The average wheat yield for MY 2016/17 is forecast down to 5.23 MT/ha, down 41 kg per ha. Higher than normal precipitation at the end of the harvesting season from April to July 2016 downgraded crop quality and yields across East China's wheat-growing provinces including, Jiangsu, Hubei and Anhui. In beginning of September 2016, the National Grain Bureau Standard Quality Center reported that the rate of sprouted, unsound, and musty kernels rose to a national average of nearly 8 percent, compared to the 2015 national average of 5.5 percent. The actual share of damaged grain may be greater than reported. Four major wheat producing provinces, Jiangsu, Anhui, Henan, and Hubei, were seriously impacted. In these four provinces as much as 24 percent of the crop may be out of condition. MY 2015/16 wheat production is unchanged at 130.2 million tons.

Winter wheat planting is nearly complete in North East China. On November 7, the China National Grains and Oilseeds Information Center (CNGOIC) reported hat MY2017/18 winter wheat production area forecast is 24.2 million hectares, nearly unchanged from last season. However, lower production yield due to wet planting conditions in Central and North East China and excessive dryness in North West China will offset expanded planted area. In recent years, scarce rainfall and depleted aquifers have limited irrigated water supplies.

Consumption

Total wheat consumption in MY2016/17 is revised up 5 million tons from November estimate to 122 million tons based on higher feed use and post-harvest loss. MY2016/17 wheat feed and residual use is raised 5 million tons to 20 million on greater quantities of feed-quality wheat. Although feed usage is forecast higher than last year, it represents a temporary spike until flood-damaged wheat supplies are exhausted. The fundamental supply and demand structure and government price floor policies for wheat remain unchanged.Jiangsu and Anhui provinces face the most serious wheat kernel sprouting issues. State Grain Procurement elevators in these two provinces tells a rejection rate of about 20 percent, leaving growers in these provinces to sell their sprouted grain to nearby feed mills at significant discounts.

A regional shortage of high-quality wheat supplies in South China has translated into higher standard milling-quality wheat prices across China. November wholesale wheat prices jumped 3 percent from August quotes to RMB 2,490 per ton.This represents a slight increase from MY2015/16 as flood and rain damage will limit domestic supplies of standard milling-quality wheat. Expansion in the bakery sector and changes to consumer behavior continues to grow demand for high-protein wheat as middle-class Chinese households adopt Western-style bakery products into their daily diets. In 2016, the Chinese bakery sector grew at a Compound Annual Growth Rate (CAGR) of 10 percent based on industry sources. Demand for high-gluten flour is expected to reach double-digits. MY2015/16 feed and residual use is revised up 0.5 million tons to 11 million tons reflecting expanded feed use of discounted, old-crop wheat supplies. In late June 2016, feed mills began purchasing a small share of out-of-condition wheat supplies at significant discounts relative to local corn prices. Post expects that feed mills near flooded areas following seasonal storms in 2016 will offer RMB 1,400 to 1,800 discounts to liquidate 2.5 to 3.5 million tons of sprouted or moldy wheat. All other wheat supplies will be marketed at a significant premium over corn prices.

As planting winds to a close across the North East region, average spot prices for wheat in November 2016 jumped 10 percent or RMB 235 per ton ($34) since August 2016 to RMB 2,490 per ton ($362).

Imports

November forecast. This represents about a 15 percent increase from MY2015/16 imports as flood and rain damage limit the availability of domestic supplies of high-quality wheat. On October 15, 2016, the NDRC announced the 2017 TRQ for wheat at 9.6 million tons, unchanged from 2016. After six months of strong wheat import volumes greater than 300,000 tons, October 2016 wheat imports fell to 262,000 tons. As of October 2016 MY2015/16 wheat imports at 3.35 million tons, or 130,000 tons lower.

Stocks

MY2016/17 wheat stocks are projected at 104.7 million tons, down 6.0 million tons from forecasts on higher feed use of out-of-condition wheat supplies. MY2015/16 wheat stocks are estimated at 96.5 million tons, down 0.5 million tons.

The State Administration of Grain has mobilized emergency funding from government resources and private sector capital to procure low-quality wheat which fails to meet NDRC criteria at the provincial-level. As of November 30, 3016, State Grain procurement of MY 2016/17 wheat stocks reached 29.4 million tons, or 8 million tons higher than last year.

CORN PRODUCTION

Corn production in MY2016/17 is forecast up 2 million tons to 218 million tons from November forecast as higher yields offset lower production area. MY2016/17 corn harvested area is forecast at 36.3 million hectares, 300,000 hectares higher than the November estimate due to limited alternative planting options in North East China. MY2016/17 corn harvested area is forecast down nearly five percent from MY2015/16 as corn producers respond to recent farm support policy changes.

The national corn planted area in MY2016/17 by more than 5 percent and lowered corn planted area in the North East region by nearly 9 percent from last season. After the announcement that the national grain reserve price support program would be eliminated, some corn producers have shifted corn area into soybean or sorghum production. Estimated MY2015/16 production is unchanged at 224.6 million tons.

Consumption

Forecast MY2016/17 corn consumption is revised up 8 million tons to 234 million tons on higher feed use, post-harvest loss, and FSI use. In spite of slower economic growth, Chinese feed demand remains strong. Swine numbers are forecast to recover and poultry production is forecast slightly higher in MY2016/17 and MY2017/18. Lower corn prices are expected to reduce demand of alternative feed ingredients such as sorghum, barley, and DDGS.

MY 2016/17 FSI consumption is forecast to expand 3 million tons higher than November estimates to 70 million tons due to strong industrial use boosted by the newly implemented government processor subsidy program and higher ethanol forecast production.

MY2016/17 feed and residual use is forecast to rise 5 million tons from November estimate to 164 million tons as domestic corn prices fall and for the overall marketing year, will gain price competitiveness over alternative feeds such as DDGS and sorghum. Temporary reserve corn supplies are not suitable for feed use. However, new crop corn supplies are meet feed miller specification standards.

Estimated MY2015/16 corn consumption is unchanged at 217.5 million tons. Old-crop corn supplies sold at auction are out-of-condition and have been tested to contain high-levels of mycotoxins and may not be suitable for corn processing or feeding. Estimated MY 2015/16 feed and residual use remains unchanged from November estimate of 153.5 million. With DDGS imports expected to drop, feed mills have begun to switch back to using domestic corn. For the week of November 21 to 27, State Grain Administration procurement prices for corn in Inner Mongolia, Liaoning, Jilin, and Heilongjiang provinces average 1,485 RMB per ton ($216). On the Dalian Futures Market, nearby futures prices for January 2017 delivery are at 1,621 RMB per ton ($235) and for March 2017 delivery at 1,562 RMB per ton ($227). As harvesting of new crop corn is nearly complete across the North East region, 30-day average spot prices in early December 2016 are at 1,681 RMB per ton ($244), dropping 2 percent or RMB 345 per ton ($50) since August 2016.

Imports

Forecast MY2016/17 corn imports are cut 2 million tons to 1 million due to diminishing price competitiveness for imported corn. Under current market conditions, the average CNF price for U.S. corn landed at Chinese ports is about RMB 1,500 per ton ($218). When domestic corn prices fall to RMB 1,400 to 1,500 per ton ($203 to $218), U.S. imported corn supplies will lose price competitiveness. On October 16, 2016, the NDRC announced the 2017 TRQ for corn at 7.2 million tons, unchanged from 2016.

Exports

On September 30, 3016, China announced that COFCO and Beidahuang, two state-owned trading companies, were granted export permits to ship 2 million tons of corn. The announcement signaled the first export permits in over a decade and signaled potential export demand to support a domestic market with weakening prices.

Stocks

Ending stocks in MY2016/17 are forecast down 2.0 million tons to 101.8 million tons from the November forecast following changes in domestic corn support policies and increased feed and FSI consumption.

As of November 30, 2016, State Grain procurement of corn in MY2016/17 totaled 27.14 million tons, down 11.1 million tons from last season. Since April 2016, government auctions have liquidated large volumes from 2013 and 2014 corn stocks. In late October 2016, China's National Grain Trade Center, an online platform for trading state-owned stockpiles, recently reported that auctions have sold 9.1 million tons closing rate of 20.80 percent during 13 national auctions.

PADDY PRODUCTION

Forecast MY2016/17 rough rice production is lowered 1.4 million tons to 207.9 million tons from the November forecast due to excessive rainfall from several tropical storms. From late August to the end of September 2016, multiple strong typhoons accompanied by torrential rain and strong winds impacted one-half of the major rice growing areas in South Central China. In this region, during the storm season, second-crop rice was between the grain-filling stage of development and full maturity. Single-crop rice has already been harvested. By the end of August 2016, flood damage across 11 provinces affected nearly 2.24 million hectares of cropland. Based on industry reports, there is no sign that the State Administration of Grain will reduce prices in upcoming fall auctions for old-crop rice stocks (MY2012/13, MY2013/14, and MY2014/15). Estimated MY 2015/16 rough rice production is unchanged at 208.2 million ton from the estimates.

Consumption

Forecast MY2016/17 consumption is unchanged at 144 million tons based on average feed use and FSI use. Uncompetitive domestic prices, inconsistent quality, and flat demand for staple grains have contributed to sluggish consumption growth. Rice feed usage will be elevated as flood-damaged rice cannot be stored or processed for milling. FSI use is raised on plentiful supplies of cheap imported rice. In MY2016/17, the November CNGOIC forecast estimates feed and industrial demand to increase 13.1 and 8.3 percent respectively, offsetting a 0.3 percent decline in food use. MY2015/16 consumption is estimated unchanged at 144 million tons. A direct comparison of Chinese denominated quotes for 30-day average spot prices does not reflect the 8-percent rise in the U.S. Dollar and Chinese Yuan exchange rate. Although early December 2016 30-day spot prices for early-indica rice at 2,599 RMB per ton ($377) are nearly unchanged from August 2016 quotes at RMB 2,605 per ton, in Chinese Yuan terms, there was a nearly 4 percent increase in U.S. Dollar-denominated prices.

Imports

Forecast MY2016/17 rice imports are raised 200,000 tons higher than the November forecast to 5.2 million tons due to high policy-supported prices and lower-quality new-crop supplies. The average CIF rice price from South East Asia to China is RMB 2,912 per ton ($448).

Vietnam and Thailand are the leading exporters of rice to China due to competitive prices, short distance to China, quality control, and trade servicing activities. Pakistan is the third-largest importer. Chinse imports of rice from Myanmar have diminished significantly due to persistent quality issues and an ongoing effort by Chinese authorities to curb cross-border trade and encourage ocean bound ports of entry. Despite a 2014 agreement between the governments of Myanmar and China for the export of 100,000 tons of rice, to date, only 30,000 tons have been delivered due to poor quality. In July 2016, Chinese import quarantine authorities rejected several consignments due to serious quality issues.On October 16, 2016, the NDRC announced the 2017 TRQ for rice at 5.3 million tons, unchanged from 2016. MY2015/16 rice imports are estimated unchanged at 4.8 million tons based on exporter statistics.

Stocks

Forecast MY2016/17 ending stocks are revised down 0.8 million tons to 70.1 million tons on lower production. Rice producers in China continue to receive government producer price supports. The government subsidies remain nearly unchanged from 2015 and government prices are slightly higher in 2016/17.

State Grain procurement authorities offer RMB 2,660 per ton ($387) for early-season indica rice, RMB 2,760 per ton ($401) for mid-to-late season indica rice, and RMB 3,100 per ton ($451) for japonica rice. In September and October, growers in flooded regions in Jiangxi, Hubei, and Anhui provinces were offered quality discounts of about RMB60 to 160 ($9 to $24) for early indica rice with procurement floor-prices ranging from RMB 2,500 to 2,600 per ton ($375 to $390). The 2016 government procurement period starts on September 23, 2016 and ends on February 28, 2017. Procurement programs in eight provinces (Anhui, Sichuan, Hainan, Hubei, Heilongjiang, Liaoning, Jiangsu and Jiangxi) in South China are underway. As of November 30, 2016, in MY2016/17, State Grain procurement of late-indica rice totaled 19.87 million tons, up 2.33 million tons from last season. State Procurement of japonica rice totals 22.56 million tons, an increase of 2.6 million tons from last season.

Estimated MY 2015/16 rough rice stocks are unchanged from November estimates 63.7 million tons. From early spring to late summer of 2016, China's National Grain Trade Center, an online platform for trading state-owned stockpiles, reported that 1.2 million tons of old-crop rice stocks (MY2011/12, MY2012/13, and MY2013/14) were auctioned from the temporary reserve onto the open market.

SORGHUM PRODUCTION

MY2016/17 sorghum production is revised higher by 100,000 tons to 3.3 million tons on greater sorghum planting area. Following the Central Government elimination of the temporary reserve program for corn, some growers have switched to grain sorghum. Sorghum production in China is concentrated in the North East region and Inner Mongolia. For growers in these regions who can no longer rely on corn support prices, sorghum production is one of the few remaining alternative crops available. The MY2016/17 harvest is nearly complete in North East China.

Imports

Sorghum imports are forecast to fall in MY2016/17. MY2016/17 sorghum imports are down 1.7 million tons to 3.8 million tons from November estimate.

As the chart indicates below, imported sorghum prices (blue line) have followed trends for China's domestic corn prices (red line) downward. MY2016/17 sorghum production is revised higher by 100,000 tons to 3.3 million tons on greater sorghum planting area. Following the Central Government elimination of the temporary reserve program for corn, some growers have switched to grain sorghum. Sorghum production in China is concentrated in the North East region and Inner Mongolia. For growers in these regions who can no longer rely on corn support prices, sorghum production is one of the few remaining alternative crops available. The MY2016/17 harvest is nearly complete in North East China.

Imports

Sorghum imports are forecast to fall in MY2016/17. MY2016/17 sorghum imports are down 1.7 million tons to 3.8 million tons from November estimate. As the chart indicates below, imported sorghum prices (blue line) have followed trends for China's domestic corn prices (red line) downward.

In the first half of 2016, traders reported that imported sorghum at the RMB 2,000 level ($295) was profitable. Following major policy announcements and falling corn prices, sorghum prices in September 2016 gradually settled to around RMB 1,690 per ton ($205) as sorghum traders offered discounts to liquidate inventories ahead of new crop corn from North East China.

Chinese feed buyers are carefully monitoring the market and adjusting their buying patterns for the next year. In November, domestic corn prices and imported sorghum prices reached parity, as the Chinese Yuan depreciated and Central Government interventions buoyed corn prices, prompting some Chinese feed millers and traders to return to the market for seasonal and speculative buying.

MY2015/16 sorghum imports are unchanged at 8.2 million tons due to strong late-season buying before the new marketing year for corn. In October 2016, China Customs data reported that as of September 2016, China imported approximately 8.2 million tons of sorghum in MY2015/16, or about 745,000 tons per month.

Consumption

MY2016/17 consumption is forecast sharply lower, falling 1.5 million tons from November estimates to 7.8 million tons on lower feed use. Feed consumption is revised down 1.7 million tons to 5.5 million tons, due to abundant supplies of new crop corn, meanwhile FSI use is revised up 200,000 tons to 2.3 million tons due to recovering demand for traditional sorghum-based spirits (baijiu) and higher utilization for ethanol production.In the North East region low-quality sorghum is used for ethanol feedstock. Post estimates that ethanol feedstock utilization will treble to 90,000 tons. MY2015/16 consumption is estimated at 10.5 million tons, remains unchanged from the estimate.

Stocks

Forecast MY2016/17 ending stocks are revised down 100,000 tons to 257,000 metric tons on higher feed demand.Estimated MY2015/16 ending stocks are unchanged at 967,000 tons on strong late-season buying ahead of the harvest of new crop sorghum and corn.

PSD Tables

Wheat

Market Begin Year

China

2014/2015

2015/2016

2016/2017

Jul 2014

Jul 2015

Jul 2016

USDA Official

New Post

USDA Official

New Post

USDA Official

New Post

Area Harvested

24069

24069

24140

24140

24300

24300

Beginning Stocks

65274

65274

76105

76105

97042

96509

Production

126208

126208

130190

130190

128000

127000

MY Imports

1926

1926

3476

3443

3500

4000

TY Imports

1926

1926

3476

3443

3500

4000

TY Imp. from U.S.

326

326

613

613

0

500

Total Supply

193408

193408

209771

209738

228542

227509

MY Exports

803

803

729

729

800

800

TY Exports

803

803

729

729

800

800

Feed and Residual

16000

16000

10500

11000

15000

20000

FSI Consumption

100500

100500

101500

101500

102000

102000

Total Consumption

116500

116500

112000

112500

117000

122000

Ending Stocks

76105

76105

97042

96509

110742

104709

Total Distribution

193408

193408

209771

209738

228542

227509

Corn

Market Begin Year

China

2014/2015

2015/2016

2016/2017

Oct 2014

Oct 2015

Oct 2016

USDA Official

New Post

USDA Official

New Post

USDA Official

New Post

Area Harvested

37123

37123

38119

38119

36000

36300

Beginning Stocks

81323

81323

100472

106472

110774

116774

Production

215646

215646

224632

224632

216000

218000

MY Imports

5516

5516

3174

3174

3000

1000

TY Imports

5516

5516

3174

3174

3000

1000

TY Imp. from U.S.

604

0

0

0

0

30

Total Supply

302485

302485

328278

334278

329774

335774

MY Exports

13

13

4

4

20

20

TY Exports

13

13

4

4

20

20

Feed and Residual

140000

140000

153500

153500

159000

164000

FSI Consumption

62000

56000

64000

64000

67000

70000

Total Consumption

202000

196000

217500

217500

226000

234000

Ending Stocks

100472

106472

110774

116774

103754

101754

Total Distribution

302485

302485

328278

334278

329774

335774


Rice Milled

Market Begin Year

China

2014/2015

2015/2016

2016\2017

Jul 2014

Jul 2015

Jul 2016

USDA Official

New Post

USDA Official

New Post

USDA Official

New Post

Area Harvested

30310

30310

30210

30200

30320

33310

Beginning Stocks

53102

53102

57436

57436

63735

63735

Milled Production

144560

144560

145770

145770

146500

145500

Rough Production

206514

206514

208243

208243

209286

207857

Milling Rate (.9999)

7000

7000

7000

7000

7000

7000

MY Imports

4700

4700

4800

4800

5000

5200

TY Imports

5150

5150

4600

5000

5000

5200

TY Imp. from U.S.

0

0

0

0

0

0

Total Supply

202362

202362

208006

208006

215235

214435

MY Exports

426

426

271

271

300

300

TY Exports

262

262

275

271

300

300

Consumption and Residual

144500

144500

144000

144000

144000

144000

Ending Stocks

57436

57436

63735

63735

70935

70135

Total Distribution

202362

202362

208006

208006

215235

214435

Sorghum

2014/2015

2015/2016

2016/2017

Market Begin Year

Oct 2014

Oct 2015

Oct 2016

China

USDA Official

New Post

USDA Official

New Post

USDA Official

New Post

Area Harvested

619

619

620

620

650

660

Beginning Stocks

568

568

706

706

967

967

Production

2885

2885

30000

3000

3200

3300

MY Imports

10162

10162

8284

8284

5500

3800

TY Imports

10162

10162

8284

8284

5500

3800

TY Imp. from U.S.

8711

8711

0

7601

0

2800

Total Supply

13615

13615

11990

11990

9667

8067

MY Exports

9

9

23

23

10

10

TY Exports

9

9

23

23

10

10

Feed and Residual

10700

10700

8800

8800

7200

5500

FSI Consumption

2200

2200

2200

2200

2100

2300

Total Consumption

12900

12900

11000

11000

9300

7800

Ending Stocks

706

706

967

967

357

257

Total Distribution

13615

13615

11990

11990

9667

8067