Beset by drought conditions in its northern reaches, China will produce about 2 percent less corn during the 2015-16 growing season than previously anticipated, according to the United Nations’ Food and Agricultural Organization. The FAO now expects the country to produce 221 million tonnes of corn instead of the forecasted 226 million tonnes.
The world is awash in corn, which has driven down its price by almost 60 percent since 2012, to about $3.55 a bushel. China recently cut subsidies to farmers in fringe growing areas to help rein in corn production, which had risen with demand for corn-based livestock feed.
The corn glut has become “a major policy issue” in Beijing, Abdolreza Abbassian, an FAO senior economist, told the Financial Times in a report published Thursday. “They realize that it can’t be sustained, but it’s not going to change in the immediate future.”
Agricultural economists say a dip in demand for corn-based livestock feed and corn used to make high-fructose syrup will mean China’s corn stockpile will rise despite the fall in projected production. The FAO expects China’s corn stocks to rise 5 percent to 103 million tonnes by the end of the current growing season.
China is experiencing its worst drought conditions in decades in its key corn- and wheat-producing regions. According to Bloomberg News, the droughts also have had deleterious effects on barley and soybean production, as well as the health of livestock, in the country’s northern provinces.