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UPDATE 1-China cuts corn surplus estimate on higher demand, lower imports
February 9, 2017 / 4:12 AM / 8 months ago

UPDATE 1-China cuts corn surplus estimate on higher demand, lower imports

* Cuts forecast on corn surplus to 4.41 mln T from 5.11 mln T

* But numbers do not include grain in vast state reserves

* Govt has been pushing to curb acreage, boost consumption (Adds detail)

BEIJING, Feb 9 (Reuters) - Beijing on Thursday curbed its forecast on China’s 2016/17 corn surplus due to better-than-expected domestic demand and lower imports, as it embarks on a strategy to erode its vast stockpile, curb acreage and boost consumption.

In its monthly crop report, the Ministry of Agriculture said it expected surplus supply for the 2016/17 season that ends in September to total 4.41 million tonnes, down from last month’s prediction of 5.11 million tonnes. That would be way below 33.73 million tonnes in 2015/16.

The data does not include state reserves, which are estimated to be around 200 million tonnes, equivalent to one year’s worth of demand.

Corn futures held their gains after the report and ahead of a more influential monthly crop report from the U.S. Department of Agriculture, due later on Thursday.

The most active May contract on the Dalian Commodity Exchange was up 0.94 percent at 1,615 yuan ($235.15) per tonne at 0342 GMT.

The ministry said its lower forecast was driven by a 200,000-tonne cut in China’s import estimate, with local grain prices becoming more competitive with international markets.

It raised its consumption estimate by 500,000 tonnes, inline with an influential think tank on Wednesday, which cited higher livestock feed demand.

The government said the stronger consumption forecast was due to better-than-expected operating rates at corn processors in the northeast corn belt.

For soybeans, it cut its estimate for the size of the domestic deficit slightly to 2.19 million tonnes from 2.16 million last month as it forecast higher output. ($1 = 6.8680 Chinese yuan renminbi) (Reporting by Hallie Gu and Josephine Mason; Editing by Joseph Radford)

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