China cuts 21/22 corn demand estimate amid weak hog price, strong substitutes

Corn demand in China in current marketing year is expected to be lower than previously projected as continued poor hog price in the country capped herd growth and substitution of cheaper alternatives increased.

China’s Ministry of Agriculture and Rural Affairs (MARA) slashed its estimate of corn demand by 3 million tons from the previous level to 287 million tons. Two-thirds of the decline are in industrial demand that dropped 2 million tons to 80 million tons.

Corn consumption in feed is expected to total 186 million tons, down 1 million tons from the previous estimate.

“Live hog price continued to hover at a low level. Margins for hog farming slid, pressuring farmers’ enthusiasm to replenish their herds”, said MARA in its latest China Agricultural Supply and Demand Estimates (Casde).

Moreover, “stronger imports of corn substitutes including sorghum and barley” also contributed to a lower estimate of corn demand in feed use.

Animal producing companies substituted around 30 million tons of corn with wheat in 2021 in their feed use as corn prices traded at a noticeable premium to wheat.

In the meantime, the estimate of Chinese domestic corn supply is unchanged at 272 million tons, which is a record high.