Floods in China Cuts Maize Output

China’s corn harvest is poised to decline for the first time in four years after flooding in its biggest-producing province and drought in its fifth largest cut yields, easing a global glut as the U.S. reaps a record crop.

Output by the world’s second-biggest corn grower fell 3.2 percent to 199.1 million metric tons, according to SGS SA, which carried out 302 interviews in the seven largest growing areas during the harvest in September and October. The state-owned China National Grain & Oils Information Center expects a 4.6 percent advance to 215 million tons and a unit of the U.S. Department of Agriculture projects a 2.1 percent gain to 210 million tons.

Smaller harvests and benchmark prices that slumped 50 percent from the record set in 2012 signal Chinese buyers will import the maximum 7.2 million tons allowed by annual government quotas. Futures have tumbled to a three-year low, curbing income for farmers from Brazil to Ukraine while lowering costs for Tyson Foods Inc. and other poultry producers.

Import Orders

U.S. corn for shipment to China in December already costs 18 percent less than local grain, according to Shanghai JC Intelligence Co., a research company. Feed mills bought at least 1.3 million tons of U.S. supply in October and began placing orders for next year, according to Shanghai JC, which is forecasting a 4.6 percent gain in the Chinese crop.

Severe Drought

The harvest in Heilongjiang province in China’s northeast, the biggest growing region, contracted 5.7 percent because of flooding while water damage in Shandong cut output by 22 percent, according to SGS. A severe mid-season drought in Henan reduced its crop by almost 15 percent, SGS said. Production in Jilin rose 13 percent while in Liaoning it climbed 9.2 percent.

Excessive rainfall was cited as the cause of bad weather in 52 percent of cases, from 19 percent a year earlier, SGS said. Reports of severe insect damage increased by 10 percentage points to 23 percent of the total, SGS found. Reports of crops severely damaged by disease rose to 6 percent from 4 percent.

Net Importer

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.

Global Production

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.

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.