It is unlikely that China would be exporting as they have this year, while drawing down stocks, unless it held in strategic reserves enough grain to cover another short crop. Further buttressing this argument is the fact that China continues to aggressively market exports, despite dryness in the major corn producing areas. Regrettably, we will have to wait into the next crop year to get any type of market signal that might reflect whether USDA has accurately captured the stocks situation in China. In 1994, China may have pushed the panic button when corn stocks dropped below 25 percent of the previous year s consumption. Most notable were the inflation problems that China was experiencing.
Imports are one way to dampen food price increases.
The other factors may have been the low quality of the corn stocks in general and a very limited ability to mobilize stocks in a timely manner. We will have to wait for a signal from China to indicate when the stocks situation becomes uncomfortable. If the USDA stocks estimate for corn is in the ballpark, China should be able to maintain growth in domestic consumption and export limited quantities for a few more years. However if China has another production shortfall, the pressure of maintaining both domestic consumption and exports could result in an uncomfortably low ending stocks number. At that point, imports become a real possibility.