Voluntary Report - public distribution

**Date:** 8/3/2005

**GAIN Report Number:** CH5059

CH5059

**China, Peoples Republic of**

**Grain and Feed**

**Corn Trade Update**

**2005**

**Approved by:**

![](media/image1.wmf)Maurice House

U.S. Embassy Beijing, Office of Agricultural Affairs

**Prepared by:**

Casey Bean and Jiang Junyang

**Report Highlights:**

China's corn exports for MY04/05 are estimated at 7 mmt, 1 mmt higher
than post\'s previous estimate. The near record corn output of 130 mmt
in 2004 resulted in lower than expected domestic prices. To prevent the
domestic price from falling, the government increased support for corn
exports in 2005. The increased VAT rebate and other subsidies from both
central and provincial governments for corn export played a decisive
role in maintaining Chinese corn competitiveness in MY04/05. The
forecast for MY05/06 corn export is unchanged at 3 mmt. As happened in
MY04/05, government decisions in MY05/06 have not been made clear ahead
of the fall harvest. Whether to expand support for corn exports will be
a key factor in determining Chinese corn's competitiveness.

Includes PSD Changes: No

Includes Trade Matrix: No

Unscheduled Report

Beijing \[CH1\]

\[CH\]

China's corn exports for MY04/05 are estimated at 7 mmt, 1 mmt higher
than post\'s previous estimate. The near record corn output of 130 mmt
in 2004 resulted in lower than expected domestic prices. To prevent the
domestic price from falling, the government increased support for corn
exports in 2005. The increased VAT rebate and other subsidies from both
central and provincial governments for corn export played a decisive
role in maintaining Chinese corn competitiveness in MY04/05. The
forecast for MY05/06 corn export is unchanged at 3 mmt. As happened in
MY04/05, government decisions in MY05/06 have not been made clear ahead
of the fall harvest. Whether to expand support for corn exports will be
a key factor in determining export competitiveness (as explained in
**CH5026**).

Preliminary official data showed China's corn output in 2004 reached
130.3 mmt, representing a rise of 12.5 percent over the previous year.

+--------------------+-----------------------+------------------------+
|                    | **In 1,000,000 MT**   | ####### Growth Rate    |
+--------------------+-----------------------+------------------------+
| **Corn**           | 130.3                 | 12.5%                  |
+--------------------+-----------------------+------------------------+
| **Wheat**          | 91.95                 | 6.3%                   |
+--------------------+-----------------------+------------------------+
| **Rice**           | 179.1                 | 11.5%                  |
+--------------------+-----------------------+------------------------+

Source: State Grain Administration's report on grain output in 2004

The increased VAT rebate has helped maintain the competitiveness of
Chinese corn export.

Customs data shows that the average monthly export prices (in FOB) at
northeastern Dalian port were lower than the average corn prices in
production region. Northeastern port Dalian exported more than 85% of
China's total corn export in MY04/05.

<table>
<colgroup>
<col style="width: 9%" />
<col style="width: 10%" />
<col style="width: 9%" />
<col style="width: 10%" />
<col style="width: 9%" />
<col style="width: 10%" />
<col style="width: 9%" />
<col style="width: 10%" />
<col style="width: 9%" />
<col style="width: 10%" />
</colgroup>
<tbody>
<tr class="odd">
<td colspan="10">China Corn Export Price (FOB in US$/ Metric Ton)</td>
</tr>
<tr class="even">
<td><h1 id="port">Port </h1></td>
<td>Oct 04</td>
<td>Nov 04</td>
<td>Dec 04</td>
<td>Jan 05</td>
<td>Feb 05</td>
<td>Mar 05</td>
<td>Apr 05</td>
<td>May 05</td>
<td>Jun 05</td>
</tr>
<tr class="odd">
<td><strong>Dalian</strong></td>
<td><strong>160</strong></td>
<td><strong>140</strong></td>
<td><strong>130</strong></td>
<td><strong>130</strong></td>
<td><strong>130</strong></td>
<td><strong>130</strong></td>
<td><strong>130</strong></td>
<td><strong>130</strong></td>
<td><strong>130</strong></td>
</tr>
<tr class="even">
<td colspan="10"><h6 id="source-china-customs">Source: China
Customs</h6></td>
</tr>
</tbody>
</table>

![](media/image2.wmf)Source: National Grain & Oil Information Center,
China Customs

Because of the government support and the favorable ocean freight rate
for Chinese corn, corn exports reached 4.9 mmt in the first half,
according to Chinese Customs data.

+-------------+-------------+-------------+-------------+-------------+
| ######      |             |             |             |             |
| ## China\'s |             |             |             |             |
|  Corn Expor |             |             |             |             |
| t in MY 04/ |             |             |             |             |
| 05 (to date |             |             |             |             |
| ) in 1,000  |             |             |             |             |
| metric tons |             |             |             |             |
+-------------+-------------+-------------+-------------+-------------+
| **Oct-Dec   | **Jan-Mar   | **Apr-Jun   | **Jul-Sep   | **MY        |
| 04**        | 05**        | 05**        | 05**        | Total**     |
+-------------+-------------+-------------+-------------+-------------+
| 435         | 1,709       | 3,215       |             | 5,359       |
+-------------+-------------+-------------+-------------+-------------+
| HS 100590,  |             |             |             |             |
| Source:     |             |             |             |             |
| China       |             |             |             |             |
| Customs     |             |             |             |             |
+-------------+-------------+-------------+-------------+-------------+

Trade sources estimate that during the third quarter in 2005, total
amount of corn shipments ranges around 1.5 mmt.

## Average corn wholesale price in production region and consuming region

+-------------------+------------------------+------------------------+
| ######### Ch      |                        |                        |
| ina: Average Corn |                        |                        |
|  Wholesale Prices |                        |                        |
+-------------------+------------------------+------------------------+
| (RMB/ Metric Ton, |                        |                        |
| USD 1.00 = RMB    |                        |                        |
| 8.27\*)           |                        |                        |
+-------------------+------------------------+------------------------+
|                   | **Production           | **Consuming Region/2** |
|                   | Region/1**             |                        |
+-------------------+------------------------+------------------------+
| #                 |                        |                        |
|  National Average |                        |                        |
+-------------------+------------------------+------------------------+
| **January         | 1178                   | 1355                   |
| (2004)**          |                        |                        |
+-------------------+------------------------+------------------------+
| **February**      | 1153                   | 1318                   |
+-------------------+------------------------+------------------------+
| **March**         | 1185                   | 1355                   |
+-------------------+------------------------+------------------------+
| **April**         | 1270                   | 1415                   |
+-------------------+------------------------+------------------------+
| **May**           | 1290                   | 1408                   |
+-------------------+------------------------+------------------------+
| **June**          | 1293                   | 1413                   |
+-------------------+------------------------+------------------------+
| **July**          | 1315                   | 1440                   |
+-------------------+------------------------+------------------------+
| **August**        | 1325                   | 1460                   |
+-------------------+------------------------+------------------------+
| **September**     | 1290                   | 1435                   |
+-------------------+------------------------+------------------------+
| **October**       | 1200                   | 1385                   |
+-------------------+------------------------+------------------------+
| **November**      | 1140                   | 1305                   |
+-------------------+------------------------+------------------------+
| **December**      | 1120                   | 1300                   |
+-------------------+------------------------+------------------------+
| **January         | 1113                   | 1275                   |
| (2005)**          |                        |                        |
+-------------------+------------------------+------------------------+
| **February**      | 1088                   | 1243                   |
+-------------------+------------------------+------------------------+
| **March**         | 1125                   | 1273                   |
+-------------------+------------------------+------------------------+
| **April**         | 1148                   | 1290                   |
+-------------------+------------------------+------------------------+
| **May**           | 1158                   | 1285                   |
+-------------------+------------------------+------------------------+
| **June**          | 1155                   | 1283                   |
+-------------------+------------------------+------------------------+
| **July**          | 1165                   | 1293                   |
+-------------------+------------------------+------------------------+

\* Exchange rate: USD1.00=RMB 8.10 since July

/1 Heilongjiang, Jilin, Shandong and Henan

/2 Tianjin, Fujian, Jiangxi and Hubei

Source: National Grain & Oil Information Center

End of report

#