March 25, 2009

China's corn prices rose 11 percent so far this year as the Chinese government stepped up its state procurement, industry officials said.

The price hike has triggered speculation that China may soon release state reserves but analysts said the government could wait until after May, when farmers complete planting.

Last year, the government pushed down prices by selling reserves due to inflation worries. However, it drew criticisms that farmers were given less incentive to plant crops.

Meanwhile, traders had difficulties in obtaining corn supplies from farmers in the north-eastern region, which produces about half the country's harvest, as the government-buying agency Sinograin had bought over 30 million tonnes for state reserves.

Its purchases, still falling short of the government's target of 40 million tonnes, have absorbed almost all the surplus in the market, particularly in Jilin and Liaoning.

Traders also believed that China kept the quota of corn imports to a low level to restrict cheaper imports.