Even a smaller-than-expected Chinese harvest won’t be enough to erase the global surplus that the International Grains Council in London says will swell stockpiles by 26 million tons in the 2013-14 crop year. China has been a net importer of corn every year since 2010, data from its customs agency shows.
Hedge funds and other large speculators have bet on lower corn prices in Chicago since July, U.S. Commodity Futures Trading Commission data show. They held a record net-short position of 159,242 futures and options in the week ending Oct. 22, according to the data, which was disrupted by the U.S. government shutdown.
U.S. farmers will reap a record 14.03 billion bushels (356 million tons) this year, 30% more than in 2012, according to the average of estimates from 36 analysts and trading firms compiled by Bloomberg. Output is rebounding from the country’s most severe drought since the 1930s.
Tyson, the largest U.S. meat processor, reported earnings and revenue that beat analysts’ expectations for the three months ended June 29 as demand strengthened and feed costs fell. The Springdale, Arkansas-based company produced an average of 41.4 million chickens, 132,000 cattle and 403,000 hogs a week last year, data on its website show.
The International Grains Council increased its forecast for global production by 5 million tons to 948 million tons on Oct. 31 and said stockpiles by the end of the season would reach a 13-year high of 152 million tons.
Forecasting and comparing output estimates for China is complicated by the lack of a baseline figure agreed on by government and private researchers. SGS used the China National Grain & Oils Information Center’s 2012-2013 crop estimate of 205.6 million tons and an area of 35.03 million hectares as its benchmark for comparisons.
China’s per-capita disposable income jumped almost fourfold since 2000, expanding meat consumption and demand for feed for livestock. The nation will produce about 711 million hogs this year, almost double the amount two decades ago, USDA data show.
Li Xuejuan, a 50-year-old farmer from Weiqiao county in Shandong, who sells some of her crop to local feed mills, said output slumped 30% this harvest.
“It’s been a very difficult year for us -- heavy rain, strong winds, flooding,” Li said in an interview in September, squashing an insect between her fingers as she inspected corncobs drying on the road. “And too many worms.”