China’s corn prices have sharply risen after the Mid-Autumn Festival and the National Day holidays and surged to a four-year high. Currently, farmers in Shandong, Hebei, Inner Mongolia and some parts in northeastern China are putting their corn crops on the market, and corn prices have been moving higher in spite of growing supplies.

The average corn price has gained about 900 CNY/tonne compared to the lowest point in 2017, and gains are steepest entering 2020, according to data from Cofeed.

Fig. 1: China’s Corn Price Index in 2016-2020

The rises in corn price have triggered a series of ripple effects. Not only domestic farmers are briskly hoarding new crops, but temporary-reserved corn is also sold with premiums. Why is corn price rising so sharply? And how about corn supply and demand in China?

Northeastern region is the largest corn producing region in China, with planting area expanding continuously in Heilongjiang, Jilin and Liaoning since 2017. Up to now, corn planting area in these three provinces takes up over 31.6% in China. And this year, these three provinces suffered three typhoons toward the beginning of the harvest.

Corn crops are basically ripe now and laid crops will have little influence on the output, according to Zheng Fengtian, deputy dean of School of Agricultural Economics and Rural Development of Renmin University of China. It may take some time to figure out how to harvest them without taking a toll, and the whole, the demand is a more important factor in pushing high prices, Zheng said.

China’s 2020-21 corn production is forecast to be 265 mln tonnes, a year-on-year increase of 4 mln tonnes, data from China’s Ministry of Agriculture and China National Grain & Oils Information Center showed. Meanwhile, 2020-21 domestic corn consumption will increase by 13 mln tonnes from 2019-20 to 293 mln tonnes.

Fig. 2: China Corn Supply and Demand Estimates (Oct, 2020)

(Note: The essay includes some excerpts from CCTV Finance.)