China scraps temporary corn storage policy

China's corn output this year will fall 2.3% from last year to 201.5 million tonnes, as farmers reduced corn planting area after the government scrapped its stockpiling plan, the China National Grain and Oils Information Center said.

China's corn planting area will shrink nearly 5% to 36.3 million hectares, but yields are expected to rise to 6 tonnes per hectare, up 162 kg from last year, the China National Grain and Oils Information Center said. China is the world's second-largest corn producer.

China's corn output is closely watched by overseas markets; last week US corn prices hit multi-year lows, pressured by expectations that US corn output will reach a record high.

For several years the government stockpiled corn, causing output to far exceed market demand; now the government has abandoned the corn stockpiling policy and is trying to encourage farmers to plant other crops.

But analysts say that despite the gradual reduction in planting area and lower prices boosting consumption, it could take China years to draw down its state corn reserves.

The agriculture minister previously said corn planting area would hold steady at around 33.3 million hectares through 2020, a figure too modest to resolve the current overcapacity problem.

The China National Grain and Oils Information Center also expects corn consumption to increase 12% to 199 million tonnes in the 2016/17 marketing year that begins in October. Feed accounts for about 60% of corn demand, with the rest used by industrial users.

China's corn imports are expected to fall to 1 million tonnes in 2016/17, down 2.2 million tonnes, or 69%, from this year, the China National Grain and Oils Information Center said.

(China National Grain and Oils Information Center)