January 2, 2004

Sharp Rise in China Grain Prices

Falling grain output coupled with tightening demand has led to a sharp increase in grain prices in the latter half of 2003.

Some of the major market situation of import and export of major grain products in 2003 as follows:

-- Output of major grain products fell short of demand, and the inventory dropped.

The Ministry of Agriculture estimates that the inventory of wheat by the end of 2003 was 83.03 million tons; 17.2 million tons less than at the beginning of 2003. Inventory of maize was 38.02 million tons; 13.55 million tons less than at the beginning of the year.

-- Prices of major grains products all rose. Due to decrease of inventory, prices of major grains and oil products grew rehabilitatively in 2003, especially after October. By November, the average sale price of wheat by farmers was 56.44 yuan per 50 kg, up 6.04% month-on-month and 10.6% year-on-year; wholesale price of maize was 1,181 yuan/ton in producing area and 1,343 yuan/ton in sales area, up 22.9% and 25.8% year-on-year respectively.

-- Advantageous products enjoy no advantages is the feature of import and exp ort of agricultural products in the year.

China's grain export volume topped US$2 billion worth in the first 10 months, still accounting for more than 12% of China's total agricultural products export.