For the first time in four years, China’s corn harvest is expected to decline due to severe flooding in one province and a drought in another. “It’s been an extremely variable year,” said Mark Oulton, the market research director for SGS. “When you have two top producing provinces suffering from serious problems, it has a big drag effect.” The past year has brought about water damage in Shandong, reducing corn output by 22 percent, and drought in Henan cutting output by 15 percent. China overall say excessive rainfall over the past year, with bad weather cited as the cause for 52 percent cases of declining crops compared to 19 percent the year before. In addition to the poor weather, insects damaged 13 percent more crops this year and disease increased by 2 percent. The overall cost of the weather related production decrease amounts to a 3.2 percent decline in corn production in China. The average yield was 5.65 tons per hectare, which is 3.8 percent than last year’s production.
However, China’s decrease in corn production may not necessarily be a bad thing. The decrease in Chinese corn production still will not even make a dent into the global surplus of corn. Furthermore, China is a net importer of corn. Importing corn from the United States costs less than 18% of buying local grain. It will be interesting to follow this story to see how China responds to the decreased grain production. Perhaps it might be in the whole world’s interest to decrease production internationally to decrease the surplus supply.
article source: http://www.bloomberg.com/news/2013-11-06/floods-to-drought-curbing-china-corn-harvest-commodities.html
image source: http://s.wsj.net/public/resources/images/OB-JM314_chinac_D_20100805165659.jpg