April 15, 2008

China grain prices unlikely to surge in near term

China's grain prices are unlikely to soar in the short run despite record corn and wheat prices in the global market, due to sufficient reserves that could meet the growing demand.

CITIC Securities Co. recently reported that China has adequate supply of grain in the local market, which will hold off any impending surge in grain prices.

The grain wholesale market in Anhui, a grain-producing province in East China, maintained balance and recorded a high failure rate in reserved corn, wheat and rice auctions since the beginning of 2008.

Premier Wen Jiabao assured earlier this month that the country holds affluent reserve provision of 150 million to 200 million tonnes.

This year, China expects its grain production to remain stable without intense natural disasters.

Meanwhile, rice price hiked 66 percent on the international market on-year in March, according to the Food and Agriculture Organization of the UN, attributed limited exports from major producers and decreasing acreage.