In an effort to reduce its excess corn supply, China announced this week that it plans to end its corn stockpiling program, the Xinhua News Agency reported. Additionally, the country said it will subsidize grain farmers, promote changes in planting and encourage firms to buy corn at market prices.

The U.S. Department of Agriculture’s March “World Agricultural Supply & Demand Estimates” report forecasted China’s corn supply to be 111.5 million metric tons at the end of the 2015-16. This is approximately 54% of the total global corn supply forecast for 2015-16. Comparatively, the U.S. corn supply is projected to be 46.67 mmt for 2015-16.

“Like others, we are closely following the market implications of the announcement from China that it will end its corn stockpiling program and reduce its surpluses of corn that have negatively impacted global markets,” U.S. Grains Council president and chief executive officer Tom Sleight said.

Sleight added that the Grains Council's offices in Washington, D.C., and Beijing, China, had been monitoring signals that reforms were coming. “While we are surprised they have been accelerated, we are hopeful they will be a step in the right direction toward more market-oriented decisions related to the supply and demand for corn,” he said.

Domestic corn prices in China have declined by about 30% in the past six months, Sleight said, adding that Chinese corn is still priced higher than the world market. However, he said the latest announcement has had market impacts already.

“We will be seeking additional details about this announcement and monitoring its ongoing impact on feed grain markets, particularly as farmers in both our country and China begin planting," Sleight said. "The council has engaged in China for more than 30 years on a wide range of issues. We value this complex relationship and look forward to continuing to work in the market for mutual benefit.”