China and World Corn Supply and Demand Nearby and in 10 Years Bryan Lohmar, China Country Director

May 16th, 20132013 Global Pig ForumWuhan, China

China and WorldCorn Supply and DemandNearby and in 10 Years

Bryan Lohmar, China Country Director

Outline

Nearby Market Corn Supply and Demand => 2012/13 and 2013/14 supply and demand

=> China, U.S., AUB

Longer Term Trends=> 10-year projections

=> China, U.S., AUB, ROW

Other Issues Affecting Corn Supply in China=> What is biotechnology?

=> What is food security?

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2013 Global Pig ForumWuhan, China

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China’s Corn S&D in 2012/13

JCI Yumi NGOIC USDASupply

Begining Stocks 32.4 41.8 *** 59.3Production 174.3 180.7 208.1 208.0

Area 32.5 34.3 34.9 35.0Yield 5.40 5.30 6.00 5.95

Net Imports 4.4 4.0 3.0 3.0

Demand 179.3 185.0 205.5 207.0Feed 109.9 129.0 126.0 144.0FSI 69.4 56.0 79.5 63.0

Ending Stocks 31.5 41.5 *** 63.3Stock change -0.9 -0.3 5.6 4.0Months of use 2.1 2.7 *** 3.7Resrvs-months 1.1 1.7 *** 2.7

Estimates of China's Corn S&D in MY 2012/13


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Private estimates

Smallerproduction



Area 32.5 34.3 34.9 35.0Yield 5.40 5.30 6.00 5.95

Net Imports 4.4 4.0 3.0 3.0

Demand 179.3 185.0 205.5 207.0Feed 109.9 129.0 126.0 144.0FSI 69.4 56.0 79.5 63.0




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Private estimates

Smallerproduction

Publicestimates

Largerproduction



Area 32.5 34.3 34.9 35.0Yield 5.40 5.30 6.00 5.95

Net Imports 4.4 4.0 3.0 3.0

Demand 179.3 185.0 205.5 207.0Feed 109.9 129.0 126.0 144.0FSI 69.4 56.0 79.5 63.0




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Private estimates

Smallerproduction

Smallerdemand

Publicestimates

Largerproduction

Largerdemand



Area 32.5 34.3 34.9 35.0Yield 5.40 5.30 6.00 5.95

Net Imports 4.4 4.0 3.0 3.0

Demand 179.3 185.0 205.5 207.0Feed 109.9 129.0 126.0 144.0FSI 69.4 56.0 79.5 63.0




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Private estimates

Smallerproduction

Smallerdemand

End stocksgoing down

(despite imports)

Publicestimates

Largerproduction

Largerdemand

End stocksgoing up

(mostly imports)



Area 32.5 34.3 34.9 35.0Yield 5.40 5.30 6.00 5.95

Net Imports 4.4 4.0 3.0 3.0

Demand 179.3 185.0 205.5 207.0Feed 109.9 129.0 126.0 144.0FSI 69.4 56.0 79.5 63.0




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Take Home Points

Take Home Point #1 – Supply ≈ Demand => China’s corn production and consumption are at about the same levels

Take Home Point #2 – Reserves => The role of reserves is more important to world markets, additional demand will be met by either reserve depletion or imports


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Production goes up 3-4 mmt => Increase due to area

Demand goes up 8-17 mmt => Feed up 6-12 mmt =>FSI up 2-5 mmt

Stocks go down 4-5 mmt => Despite imports of 6-7 mmt

JCI %∆ USDA %∆Supply

Begining Stocks 31.5 63.3Production 177.1 1.6% 212.0 1.9%

Area (ha) 33 1.5% 36.0 2.9%

Yield (mt/ha) 5.36 -0.7% 5.89 -1.0%

Net Imports 6.3 7.0

Demand 187.3 4.5% 224 8.2%

Feed 116 5.6% 156.0 8.3%

FSI 71.3 2.7% 68.0 7.9%

Ending Stocks 27.4 58.3Stock change -4.1 -5.0Months of use 1.8 3.1Resrvs-months 0.8 2.1



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• Protein meal inclusion growth rates will slow=> Energy feed will grow as fast as protein meal going forward

• Other energy feed inclusion rates will slow=> Bran levels will remain steady and wheat inclusion will decrease

• Together, these trends will cause corn feed demand to grow faster than total feed demand

=> In the last decade, corn feed demand grew slower than total feed demand

Corn Feed Demand Will Grow Faster than in the Past Decade

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Percent ProteinMeal in1993 is 8.6%


The Inclusion Revolution has Reached its Conclusion

China’s Feed Production andComposition: 1993-2012 (mmt)



The Amount of Non-Corn Energy Feed is Relatively Fixed

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Percent Other Energy in 1993 is 35.1%

Percent Other Energy in 2003 is 24.8%

Percent Other Energy in2012 is 22.3%


Even the Percent of Corn has Trended Down

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Percent Corn in 1993 is 56.3%

Percent Corn in 2003 is 55.9%

Percent Corn in2012 is 51.9%



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Implications of Changing Compositionon Corn Feed Demand

4.5%

4%

3.5%

Total Feed 4.5% 4.0% 3.5% Total Meal 7.6% 4.0% 3.5% -Other Meal 3.5% 3.0% 3.0% -Soybean Meal 9.9% 4.4% 3.7% Total Energy 3.6% 4.0% 3.5% -Bran and Wheat 3.2% 0.0% 0.0% -Corn 3.8% 5.5% 4.6%

2002 - 2012

2012 - 2017*

2017 - 2022*

Total feed ingredientdemand grew by4.5 percent over

the period 2002-2012


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Assume feed demand growth slows to:

4.0% over2012-20173.5% over 2017-2022

4.5%

4%

3.5%


2002 - 2012

2012 - 2017*

2017 - 2022*




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Assume feed demand growth slows to:

4.0% over2012-20173.5% over 2017-2022

Corn demand will grow by

5.5% over 2012-20174.6% over 2017-2022

4.5%

4%

3.5%


2002 - 2012

2012 - 2017*

2017 - 2022*




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U.S. Corn Export Supply in 2013/14

2012/13 2013/14 %Δ

SupplyBegining Stocks 25.1 19.3Production 273.8 359.2 31.2%

Area (ha) 35.4 36.2 2.3%

Yield (mt/ha) 7.74 9.92 28.2%

Net Exports 15.9 32.4 103.8%

Demand 263.8 295.2 11.9%

Feed 111.8 135.3 21.0%

FSI 152.0 159.9 5.2%

Ending Stocks 19.3 50.9 163.7%

Stock change -5.8 31.6Months of use 0.9 2.1

USDA Estimates of US Corn SnD (mmt)


Large production increase! => Yields back to trend

Exports double=> Despite large increase in demand

Stocks restored=> 2.1 months use is averageover last 30 years

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Planting is Late in 2013 2013 Global Pig ForumWuhan, China

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Late Planting Can Affect Yields

*Late planting defined as the number of days after May 10th

that USDA declares 95% planting accomplished

The Relationship Between Late Planting and Yields in the U.S., 1980-2012*


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Late Planting Can Affect Yields

*Late planting defined as the number of days after May 10th

that USDA declares 95% planting accomplished

The Relationship Between Late Planting and Yields in the U.S., 1980-2012*


2012 1984

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Yield Trends in the U.S., 1980-2013

Yield Trends are More Important 2013 Global Pig ForumWuhan, China

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Argentina, Ukraine, Brazil 2013 Global Pig ForumWuhan, China

All three countries arenow significantcorn exporters

World corn markets aremore diversified than10 years ago

Argentina Ukraine Brazil

SupplyBegining Stocks 0.9 0.8 11.5Production 27.0 26.0 72.0

Area (ha) 3.5 4.7 15.5Yield (mt/ha) 7.71 5.53 4.65

Net Exports 18.5 16.5 17.2

Demand 8.3 8.6 54.0Feed 5.3 7.0 46.0FSI 3.0 1.6 8.0

Ending Stocks 1.1 1.8 12.3Stock change 0.2 1.0 0.8Months of use 1.6 2.5 2.7

USDA Estimates of 2013 Corn SnD for Argentina, Ukraine, and Brazil in 2013/14

Adequate stocks despiteexport program

Long-term Projections are Tricky!

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Yield Growth Expected to Continue

Actual and Projected YIELD Growth (mt/ha): 1990-2021

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Area Growth Expected to Continue

Actual and Projected AREA Growth (mha): 1990-2021

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Output Growth Expected to Continue

Actual and Projected PRODUCTION Growth (mMT): 1990-2021

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Issue: GMO Technology

• Many people do not understand GMO technology in China (and elsewhere!)

=> 36 percent of research scientists in China think Americans DO NOT eat GMO foods

• GMO technology currently plays a significant role in China’s and the world’s food security

=> Food prices would be much higher without GMO crops

=> GMO technology could be even more critical to future world food security

• The GMO debate should be based on science and reasonable facts, not misleading or false information


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Issues: Food Security

• China’s defines “food security” as “self sufficiency” (typically 95 percent)

=> If true, then I am not food secure, and neither are you!

• Modern definitions emphasizes low income consumer’s access to sufficient food and nutrition

=> Over 30 percent of school children in central and western China are anemic, as are 50 percent of newborn babies

=> This is food security that can be resolved with lower priced pork!


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Conclusion

• China’s corn demand will likely be greater than

domestic production in coming years=> The United Sates and other countries are expected to have

ample surpluses to export

• GMO technology is serious and could improve

food security not only for China but also the

world=> Discussion of GMO technology should be taken more

seriously


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The U.S. Grains Council

- Developing Markets - Enabling Trade - Improving Lives

Supporting the Modernization of China’s Livestock and Feed Industries

Establishing one of China’s first modern feed mills in 1984

Sponsoring seminars and U.S.-China technical exchanges involving hundreds of participants

Supporting China’s Food Security through Trade and Information Exchanges

Providing reliable information on U.S.

production capacity, market conditions, and grain quality

Sponsoring study and market assessment teams to the U.S. involving hundreds of participants

China and World Corn Supply and Demand Nearby and in 10 Years Bryan Lohmar, China Country Director

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Transcript of China and World Corn Supply and Demand Nearby and in 10 Years Bryan Lohmar, China Country Director