According
to CCM, China has put great efforts in increasing the planting area and the
output of corn seed in 2016. However, lesser will of innovation of Chinese
producers led to a slight profitability of the corn seed market.
Source: Baidu
China's
corn seed production experienced great growth in 2016, with an overall increase
in 33.67% in output and a rise of the production area by 19.89% compared to
2015. These numbers represent the second peak of production during the last 20
years, according to CCM's research.
The
overall planting area of hybrid corn in China reached an amount of over 273
thousand ha in 2016. Looking at 2015, the amount has increased by more than 45
thousand ha during 2016. The harvest from this area weighted almost 1.5 billion
kg. The increase compared to the last year amounts 369 million kg.
CCM
explains this development with two main reasons. The first one is, that China
was facing a boom in authorised new varieties of corn seeds, leading to the
increase of the planting area of those. Secondly, the crop damage as a result
of natural disasters has not been as critical as in recent years, allowing the
much higher output of corn seeds compared to last year.
In
fact, the northwest of China was the only region that endured some natural
complications namely extreme temperature fluctuations, wind hail, diseases, and
pests. However, the harvest of crop per unit area did still experience an
increase of 3% up to 6% in comparison to 2015.
The
corn seed production area and output in China, 2014-2016
Source:
The National Agriculture Technology Centre
According
to the Seed Information and Technology Department of the National Agricultural
Technology Centre, the oversupply of hybrid corn will even get worse in spring
and summer of 2017. It is estimated, that the overall amount of newly produced
corn seeds will succeed 2 billion kg in summer 2017. The output of 2016 has
been 1.465 billion kg.
Furthermore,
the planting area of corn seeds will be reduced, following the adjustment of
the planting structure and the sluggish commodity market of corn. The supply
and demand index is likely to hit a number around 1.80. Next year will also
lead to a higher competitiveness of corn seed, reducing the price of those to
some degree when finally getting stable at a low level. The high
competitiveness is explained by the NATC with the much higher supply compared
to the actual demand. The huge amount of over 2 billion kg supply will be
facing the much lower demand of around 1.15 to 1.2 billion kg.
As
a fact, China is currently reducing the agricultural area used for corn seeds
by over 3.33 million ha till 2020.
All
the described factors of low corn seed prices and high competitiveness have led
to a negative outlook for China's farmers to plant corn seeds. Low incomes and
even losses are the inconvenient reality for many producers.
China
is the second biggest seed market worldwide at the moment with an amount of
planting seed by about 12.5 million tonnes. Compared to the USA, the corn
storage in China was almost double than the one in the USA. Looking 10 years back
in 2006/07, the corn storage had been pretty much the same.
About
CCM:
CCM is the leading market intelligence
provider for China's agriculture, chemicals, food & ingredients and life
science markets. Founded in 2001, CCM offers a range of data and content
solutions, from price and trade data to industry newsletters and customized
market research reports. Our clients include Monsanto, DuPont, Shell, Bayer,
and Syngenta. CCM is a brand of Kcomber Inc.
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