China's corn production shows decrease

China produced 163.97 million tonnes of corn in 2009, down 1.17%, according to the National Bureau of Statistics cited by the China National Grain and Oils Information Centre (CNGOIC) on Monday (May 31).

 

The figure was in line with CNGOIC's own estimate but some market participants think it is too high. Independent institutions have estimated the 2009 harvest could be as low as 140 million tonnes due to drought, and many traders have dismissed the CNGOIC estimate, saying it may have been inflated by overly-optimistic forecasts from local government officials.

Expectations of a corn shortage, coupled with a recovery of demand from feed and corn processing industries, have pushed up the country's corn prices in some areas to a record level and prompted large imports from the US.

 

"The abnormal price rise may cause other grain prices or overall food prices to rise and increase pressure for more imports," Cheng Guoqiang, a researcher with the government top think-tank said.

 

Cheng, a researcher with the State Council's Development Research Centre, said the price rise was not because of a supply shortage, but was partly due to Beijing's stockpiling programme and poor logistics for transporting corn from the major growing areas in the northeast.

 

Cheng also called on Beijing to regulate imports to prevent a large volume from hurting the domestic market. China, the world's second-largest corn consumer, has purchased 595,100 tonnes from the US, the largest volume in nearly four years.

 

 

Under China's import quota system, Cofco could purchase about 4.3 million tonnes of imports this year if the government decides it to be necessary. Although it has used only 12% of its quota so far, Cofco has requested an additional 1 million tonnes of import quotas, Rabobank said in a report on Monday (May 31).

 

China's government is keen to avoid strong inflation, which edged up to an 18-month high in April, of which food prices rose the fastest, at 5.9%.

 

Cheng urged government authorities to increase reserve sales in major consuming areas and ban on holding grain stocks by a range of state-owned companies that were directed to take part in last year's stockpiling programme.

 

The State Council vowed last week to clamp down on hoarding of agricultural commodities after bad weather fuelled speculation that the country could face shortages of some products.

 

Dalian corn futures traded slightly down on Monday (May 31).

 

The state statistics bureau put China's total cereal output in 2009 at 482 million tonnes, a rise of 0.65%, according to a report by CNGOIC.