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Drought to Cause China Corn Crop to Fall Most in Fifteen Years

China was expecting an all-time record corn crop this year, however, output is now expected to fall by 5.8% - the biggest decline in 15 years, due to drought this summer, followed by rains late in the season which delayed the harvest and stunting plant growth, according to a Bloomberg survey of farmers in China’s main corn producing regions in September and October, conducted by the researcher, SGS SA.

This drop in production may drive up already high corn prices supported by the government’s subsidized purchases and rejection of cheaper foreign imports.

SGS dispatched five research teams throughout China’s cornbelt, interviewing 325 corn farmers during harvest. Across China’s seven biggest corn producing regions which accounted for 69% of total output last year, farmers in all but one region expanded planted acreage this season. Despite this expanded planting, drought damaged crops and stunted growth, especially in the northeast, and in Inner Mongolia in the west. Indeed, as of the end of July, Liaoning - China’s fourth largest corn growing province, saw rainfall that was only 10% of normal levels and the lowest since 1951.

The drought this season appears to be more severe than last year, as 74% of farmers surveyed responded that dry conditions caused yield losses, and 18% cited crop damage. Surveyed farmers also reported higher levels of pest damage, with 22% of respondents claiming pest damage rated as severe, up from 6% last year. Thirteen percent of farmers also cited severe damage from disease – up from 4% in 2014.

Heilongjiang, China’s top corn producing region increased planting by 0.6% this year, however, it saw yields fall by 12% mostly due to wind damage, while Jilin, the second biggest Chinese corn producing region, saw yields decline by 15% due to lack of water and pest damage.

Because of the country’s pricing policies and restrictions placed on imports, its corn market is insulated from world markets. And although China has built up record domestic stocks of corn, it consumes more corn than any country except the U.S. – mostly to supply feed to its hog industry due to the fact that the country consumes more than half of the pork eaten worldwide.

“The situation would’ve been a lot worse if farmers hadn’t been switching to new and better varieties of hybrid corn,” which are more resistant to drought and pests, said Mark Oulton, SGS global agriculture market research manager in Shanghai. “Twenty years ago, this would have been a catastrophe.”

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