Corn planting area keeps shrinking; what is the current supply and demand situation?

As far as China's current corn situation is concerned, it is still in a stage of oversupply, but with the advancement of China's grain supply-side structural reform, the corn planting area is also being gradually reduced, and corn prices are gradually transitioning to a market-driven system. Now, China's grain reserve stockpile is also gradually declining, but the overall supply situation is still in a state of oversupply.

Taking 2017 as an example, the grain reserve stockpile was 179 million tons, while the historical peak once reached 230 million tons. After consecutive auctions in April, May and June of this year, according to the United States Department of Agriculture, China's corn ending stocks for 2018/19 are projected at 60.5 million tons. It should be said that overall, China's corn inventory is on a downward trend. In 2017, China's corn surplus showed negative growth for the first time, and according to the current trend, China's corn supply will gradually tighten in the future.

The reduction in corn inventory is mainly due to the capacity expansion of corn deep-processing enterprises. Judging from the corn auctioned in China this year, it was basically all old corn; in fact, the corn auctioned in April was basically corn from 2013 and 2014, and this type of corn is difficult to use as feed, so it was basically all used for ethanol processing, and the current rapidly expanding capacity has greatly absorbed the corn inventory. It is expected that in the future China will still have a capacity expansion scale of more than 20 million tons.

At the same time, due to the advancement of China's grain structure planting reform, the corn planting area has also been gradually reduced. For example, looking at this year's planting situation, the planting areas of soybean, rice and peanut all increased by varying degrees, but the corn planting area kept declining. Taking 2017 as an example, the corn planting area was 530 million mu, 40 million mu less than the planting area in 2015, getting closer and closer to the national goal of reducing it by 50 million mu.

In this way, China's overall corn reserve situation still looks quite ample; more precisely, it should be regarded as surplus. Under the current situation in China of expanding soybean and reducing corn, China's grain structure will also become more balanced in the future, which will be of great significance whether for safeguarding China's food security or for domestic grain imports and exports.

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