Many traders had expected the southern area's needs to be covered by imports from foreign supplies because world corn prices are below internal Chinese prices. However, caution is advised in relying on this interpretation, since the Chinese are very shrewd traders. The Chinese drought was relieved by widespread rains in mid-August, and by lighter and more scattered rains earlier in the month. The extent of yield losses from earlier hot, dry weather remains uncertain, but significant crop damage is widely believed to have occurred. In contrast to reduced feed grain production, China's 1997 wheat crop is estimated to be up 258 million bushels or 7 percent from last year.
China often is a large importer of wheat, and sometimes has feed wheat to livestock.
In the year ahead, its wheat imports are expected to be unusually low. A better reading on corn price prospects for the year ahead will be available after the September 12 USDA crop forecasts. So far, new-crop corn futures prices have been considerably below levels that would be expected if China does import four to six million tons of 1997 U.S. corn. USDA's September 12 World Crop Report will contain an updated estimate of China's 1997 grain and oilseed production. USDA estimated the crop at 2.74 billion bushels on August 1, the largest soybean harvest on record and up 15 percent from last year.