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China lowers corn acreage, output projection

By Zhang Ye (Global Times)

09:13, August 16, 2012

The China National Grain and Oil Information Center said in a report Wednesday that the corn production this year would decrease to 197 million tons, 500,000 tons lower than the estimate in July.

According to the report, the planting area of corn will be 34.3 million hectares this year, nearly 1 million hectares lower than the estimate made in July, with a corresponding decrease in corn production.

An official surnamed Wang from the center confirmed the revised forecast to the Global Times Wednesday but declined to disclose the reasons for the decrease.

Some experts attributed the corn production drop to damages caused by insects in large parts of North and Northeast China since August.

According to data collected by the agricultural authority in Changchun, capital of Northeast China's Jilin Province, the insect-affected areas reached 12,000 hectares and the government had spent 6.14 million yuan ($0.9 million) on insect control until August 12.

The Plant Protection and Quarantine Station of Hebei Province said Tuesday that 99,000 hectares of crops have been affected by insects.

"China is expected to see higher inflation in the second half, which will push the corn prices higher. And the drop in production would put further pressure on prices in the domestic corn market," Ma Wenfeng, an analyst with China Agriculture Consultant, told the Global Times.

Although China's CPI grew just 1.9 percent in July, 0.3 percentage point lower than June, the monthly CPI growth during the second half may reach 6-7 percent, said Ma.

Some experts also noted that the ongoing drought in the US will bring down the country's corn production, narrowing the global supply of corn.

"A decline in US corn exports and increase in imports would push corn prices up in the international as well as the Chinese market," said Ma.

The National Drought Mitigation Center in the US reported in July that 46.84 percent of the US soil was in drought.

The corn production in the US this year would be about 274 million tons, 13 percent lower than last year, according to the US Department of Agriculture on August 10.

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