April 8, 2009

China's grain market is expected to see wheat and corn surpluses and low soy supply this year, according to Zeng Liying, deputy director of the State Administration of Grain.

Zeng said a survey on the farmers' planting intention showed that China's wheat acreage would continue to increase in 2009 as the drought earlier this year had only a minor impact on wheat growth. Also, the Chinese government has a high level of state reserves which would lead to grain supply surpassing demand.

According to an analysis, there was a large increase in grain output and reserves last year but dwindling demand from the livestock sector would pull down grain prices this year.

Meanwhile, China's minimum grain price and interim reserve policies would serve to support grain prices.