BEIJING (Reuters) - China’s farmers are expected to plant more corn this year, eyeing higher prices and profits despite a push to reduce acreage devoted to the cereal under the government’s latest five-year plan.
Corn planting has fallen for the past two years, while soybean acreage has risen, as Beijing looks to whittle down nearly 200 million tonnes of corn stocks, the legacy of a now-abandoned stockpiling scheme that offered a minimum floor price.
However, falling soybean prices and a rise in corn prices mean farmers will make nearly twice as much by growing corn this year, even allowing for increased soybean subsidies, according to estimates from five analysts, farmers and industry experts interviewed by Reuters.
“Profits from growing corn are much higher than those from growing soybeans this year, even with subsidies. Corn acreage will rise while soybean acreage will fall,” said He Yuxin, analyst with Zhuochuang, a commodities consultancy based in Shandong province.
With planting set to start in late April, he estimates soybean acreage will fall back to at least 2016 levels at around 108 million mu (7.2 million hectares) this year, offsetting a 12 percent rise last year to 121.5 million mu.
A mu is a Chinese measure of land equal to about a fifteenth of a hectare.
The change in planting threatens the government’s five-year plan, aimed at reducing corn acreage by 12.5 percent from 572 million mu in 2015 to 500 million mu by 2020 and boosting soybean planting by more than 40 percent to 140 million mu.
At a briefing this month during the annual meeting of the Parliament meeting, China’s Agriculture Minister Han Changfu cautioned farmers against “blindly” expanding their soybean crop.
“Don’t backtrack,” he said. “We have reduced acreage in the past two years and will keep adjusting the crop structure.”
(GRAPHIC: Diverging fortunes - China's soybean and corn prices - reut.rs/2FJjXZv)
Soybean prices have fallen 10 percent since harvesting in late September, touching a level equaled only for one day a year ago since 2010, pressured by ample supplies and huge imports of cheap beans.
By contrast, corn prices have climbed 11 percent over the same period to hit a 20-month high on March 9.
Prices have been supported by cuts to acreage over the past two years. And while the government is selling down its stockpiles, much of the grain is now seen as fit only for processing into fuel.
The price swing means farmers could make more than 500 yuan ($79) for each mu of corn they grow, and less than 300 yuan for soy this year, according to analysts, farmers and experts.
“Corn prices are pretty good this year. So I plan to stick to what I grew last year, half corn, and half soybean,” said Mr. Shan, a farmer in northeastern Jilin province, the country’s second-largest corn producer. He declined to give his full name.
He switched more than a third of his land to soybean from corn last year after corn prices dropped.
Li Wenguo, a soybean seed wholesaler based in Heilongjiang, China’s top corn and soybean producer, said business has been slower than expected so far this season.
“Last year, around this time, we had sold more than 20,000 tonnes of soybean seed,” he said. “But this year ... we’ve only sold 3,000 tonnes so far. Farmers don’t want to grow soybeans. Everyone goes to corn because the profits are better.
Reporting by Hallie Gu and Josephine Mason; editing by Richard Pullin