May 8, 2013

China's higher-than-expected state purchase of corn tightens supply

China's state purchase of grain from the country's main growing area was higher than expected, which will possibly lead to a tighter market supply while pushing up domestic grain prices, according to a recent statement by the China National Grain and Oils Information Centre.

The centre said that by April 30, China Grain Reserves Corp, the state-owned agricultural conglomerate in charge of the country's grain reserves, had purchased and stored 24 million metric tonnes of corn from farmers in Northeast China, the country's main corn growing region. The centre previously estimated the figure would be 20 million tonnes.

Industry analysts said because of the increased purchase, the company might cut down this year's corn imports. This will lead to a tighter supply in the market, forcing up grain prices in China's domestic market, they added.