June 5, 2008

China anticipates bumper corn and wheat harvest for 2008

China will harvest record corn and wheat this year, with wheat crop expected to take pressure off corn prices as it will delay Chinese imports, the China National Grain and Oils Information Center (CNGOIC) said Wednesday (June 4, 2008).

More wheat and corn will boost China's grain reserves and lower costs for meat breeders, helping keep inflation in check, analysts said.

The country's bumper wheat harvest forecast matches similar expectations for major exporter Australia and for India, pressuring global wheat prices.

CNGOIC raised its 2008 wheat harvest forecast to 112.5 million tonnes from 107.6 million. It adjusted the figure for 2007 wheat output to nearly 110 million tonnes, from 106 million.

However, the CNGOIC said the government is least likely to relax controls over wheat exports.

Meanwhile, the CNGOIC also raised its estimate for corn harvest this year at a record 154 million tonnes, up from a May estimate of 149 million tonnes, although traders said the estimates might be optimistic.

Corn farmers in the northeast, encouraged by incentives, were still eager to grow more corn amid better soy returns last year, traders said.

Export restrictions and good harvests in the last four years have cushioned Chinese grains prices from rising as fast as international prices.

Agricultural minister Sun Zhengcai said a record high yield has contributed to the bumper wheat harvest this year, while a May earthquake had little impact on grains output.