Tough corn planting season in China could affect markets

Farmers in the U.S. were not the only ones facing challenging spring weather this year.

An unseasonably cold and wet planting season causing farmers in Northeast China to delay planting by as much as two weeks in the country’s largest corn production region.

The planting delays are expected to cause farmers to shift acreage out of corn to soybeans according to China’s JCI Intelligence and Yumi.com, two agricultural market reporting firms.

However, JCI reports that corn acreage is expanding in Inner Mongolia, and this partly offsets the reduced acreage in Heilongjiang. Delayed planting may also affect yields as farmers turn to shorter-season and lower-yielding varieties, and make the region more vulnerable to an early frost.

The possible reduction of corn sown area in Northeast China may be mitigated by expanded corn sown area in North China.

“Peanut area expanded last year and this reduced corn sown area expansion on the North China Plain. However, peanut prices are currently 20% below last year, which could provide more opportunity for corn area to expand in that region this year,” said Bryan Lohmar, the U.S. Grains Council’s director in China.

Soybeans also receive some price support. While corn prices are roughly at or just below the levels during last year’s Northeast planting season, soybean prices are 10 to 15% higher than last year. Higher prices, coupled with lower-yielding, short-season corn varieties and higher corn production costs, also make expected soybean returns looks better when compared to expected corn returns relative past years in the northern parts of the Northeast production region.

Heilongjiang Province has seen corn area expand significantly in the past few years as high corn prices have caused increasing numbers of farmers to switch out of soybeans and into corn.

Statistics from China’s National Grain and Oilseed Information Center show corn area in Heilongjiang rose more than 1 million hectares (2.47 million acres) from 2009 to 2012, comprising more than 26% of the 3.8 million hectare (9.4 million acre) expansion in corn sown area over that period in China. Heilongjiang is also China’s biggest corn producing province, with 14.6% of China’s 2012 corn production.

The four Northeast provinces (Heilongjiang, Jilin, Liaoning, and Inner Mongolia) together produced 42.9% of China’s corn in 2012. The wet weather in the Northeast is good for soil moisture, but is raising corn planting costs as farmers reduce machine planting and instead plant by hand to be sure to get corn planted on time.

The five North China Plain Provinces (Shandong, Henan, Hebei, Anhui, and Jiangsu) together produced 29.3% of China’s corn in 2012. Most corn planting on the North China Plain occurs in July, after harvesting a winter wheat crop in the region.

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