Temporary corn collection and storage policy cancelled

China's corn crop this year will fall 2.3 percent from last year to 201.5 million tons as farmers reduce their acreage following the government's cancellation of a stockpiling program, the State Grain and Oil Information Center said.

China's corn acreage will be reduced by nearly 5 percent to 36.3 million hectares, but yields are expected to rise to 6 tons per hectare, up 162 kilograms from last year, according to the State Grain and Oil Information Center. China is the world's second largest corn producer.

China's corn production has been under scrutiny overseas, with U.S. corn prices hitting multi-year lows last week, weighed down by expectations that U.S. corn production will hit record highs.

After years of stockpiling maize, which resulted in yields well above market demand, the government has abandoned the stockpiling policy and tried to encourage farmers to plant other crops.

But analysts say it could take years for China to drain its corn stockpile, despite dwindling acreage and lower prices boosting consumption.

The agriculture minister has previously said corn acreage will stabilize at around 33.3 million hectares by 2020, a figure too modest to address current overcapacity.

The National Grain and Oil Information Center also expects corn consumption to increase by 12% to 199 million tons in the 2016/17 market year, which begins in October. Feed accounts for about 60% of corn demand, with the rest being used by industrial users.

According to the State Grain and Oil Information Center, China's corn imports are expected to fall to 1 million tons in 2016/17, down 2.2 million tons or 69 percent from this year.

(National Grain and Oil Information Center)