Grain prices threatened as stockpiles rise and bumper harvest expected
China yesterday announced that stockpiles of grain increased significantly on last year, saying that China was building reserves in order to guarantee food security and maintain stable grain prices.
China’s grain prices have however been falling steadily over the last six months despite the build-up. In February the price of rice and corn had fallen 5.1 percent and 11.5 percent from last September.
It comes after five years over bumper harvests in China, with supply well overtaking demand.
Vice Minister of Agriculture Wei Chao'an yesterday announced that China's grain production was 5.285 million tons, 26.9 million (5.4 percent) higher than 2007. That’s against a total consumption of 5.15 million tons.
Chinese government, enterprises and farmers have now stored about 3.5 million tons, equal to about 70 percent of annual consumption.
According to the Chinese proverb “In the year of the cow and the horse, the fields are prosperous”, this year should be another bumper grain harvest, despite the droughts in northern provinces. If it turns out to be true, then there really is little chance of grain prices recovering.
According to Wei, winter wheat crops stand at 333 million mu (22.2 million hectares) this year, 2 million mu more than last year, with China expecting a grain output of around 500 million tons this year.
Agricultural stocks dropped by an average of 1.61 percent. Corn production, led by Shandong Denghai Seeds (SZ:002041）dropped on average by 2.51 percent. Shandong Minhe Animal Husbandry （SZ:002234）declined 1.73 percent.
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