BEIJING, Feb 8 (Reuters) – China will consume more corn in 2016-17 than previously forecast as demand for the grain in livestock feed will rise after China slapped anti-dumping duties on U.S. distiller’s dried grains, an influential report said on Wednesday, pushing up prices.
In a daily report, the China’s National Grain and Oils Information Center (CNGOIC), an official think-tank, raised its estimate for corn consumption for the 2016-17 season to end-September to 197.6 million tonnes, up 21 million tonnes from the 2015-16 year.
The forecast is up by 500,000 tonnes from a previous estimate made in January.
Read Also
Alberta Crop Report: Rains in the south, dryness in the north
Rain fell onto the southern half of Alberta last week, while hot and dry conditions persisted in the northern half, according to the province’s crop report released on July 18.
The report reinforced an increasingly bullish view on the outlook for the Chinese dometic corn market, spurring renewed buying in futures and extending a months-long rally amid hopes that better-than-expected demand this year will help erode its huge corn stockpile.
With imports of DDGS from the U.S. restricted, livestock feeders are forced to use domestic feed supplies.
On Wednesday, Reuters reported that Beijing is urging regional authorities in the nation’s top four corn producing regions to offer subsidies to livestock feed companies, the latest move to boost consumption of a bumper crop.
After dipping into negative territory on Wednesday morning, the most-active May futures contract closed up 0.5 percent at 1,602 yuan ($232.68) per tonne.
“The report had some impact on the market especially when right now the market is very conflicted,” said Zhu Gang, a manager at the asset management division of Shanghai Zhongqi Futures.
“Any good news would … cause a stir. Still, given the large inventory, the increased demand would not change the market fundamentally.”
China in January increased punitive tariffs on imports of U.S. distillers’ dried grains, a byproduct of corn-based ethanol, in a win for China’s fledgling ethanol industry.
