China corn crop falls 13% on drought: survey

Production dropped to 144.374 million metric tons (5.684 billion bushels) from 165.9 million tons last year, based on interviews completed during the harvest in September and October by Geneva-based SGS SA for Bloomberg. The estimate is below the 155 million tons the U.S. Department of Agriculture predicted on Oct. 9 and the 163 million forecast on Oct. 14 by the China National Grain and Oils Information Center.

Crop yields dropped 16 percent, erasing the benefit of a 4 percent increase in planted acreage, said SGS, which had six teams of agronomists travel 15,000 kilometers (9,320 miles) across seven provinces for the survey. Drought ravaged 19.8 million acres of farmland, mostly in the provinces of Liaoning, Inner Mongolia, Hebei and Jilin, cutting water supplies for 7 million people and 3.8 million head of livestock, according to the Ministry of Water Resources Sept. 2.

“It was a regionalized drought in parts of the main northeastern growing region,” said David Smoldt, a vice president for FCStone Group Inc., a commodity brokerage and consultant in West Des Moines, Iowa. A smaller crop will lead to a drop in inventories before next year's harvest, he said.

SGS interviewed 300 farmers face to face in the main growing regions of central and northeast China. Fifty-four percent of those surveyed reported bad weather in 2009, compared with 3 percent last year. Yields in Jilin province, which in the past has been China's top-growing region, will fall 42 percent, the survey data show.

Heilongjiang province, where plantings increased because of higher prices, is the nation's top producer, with 14 percent of national production, followed by Shandong, Jilin and Hebei, all with between 11 percent and 12 percent, the research showed. The final crop estimate was derived from survey results and official government forecasts for the rest of China.

The drought may mean a bigger drop in inventories than forecast by the USDA, which last month estimated a decline of 8.4 percent to 48.6 million tons from 53.1 million tons last year, which were the highest since 2003, according to Mike Callahan, the senior director of international operations at the U.S. Grains Council, a trade group partially funded by the government. The U.S. is the largest corn grower and exporter.

China maintains government-owned stockpiles of corn, used to feed livestock and to make food ingredients and biofuels. Its domestic crop and use of inventories have kept China self- sufficient in corn supplies, with imports at less than 1 percent of output for 13 years, USDA data show. Last year, China reaped 21 percent of global output and the U.S. produced 39 percent.

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