Summer grain production in China shows uptrend

China's summer grain production will continue its growth trajectory this year despite the erratic weather, according to analysts.

 

Ample state reserves and stable agricultural policies will continue to keep grain prices steady this year, with limited impact seen from the fluctuations in global wheat prices, said analysts.

 

 

Data collected from the provinces and areas are under calculation and the total output is yet to be calculated, Han Jun, director-general of the rural economy department at the Development Research Centre under the State Council said.

 

Summer grains are the main food source for people in northern China and together with corn and paddy has a 3% weightage in the Consumer Price Index, a key gauge of inflation.

 

Due to the serious drought in south-eastern areas and cold weather in northern and eastern China during winter and spring, there were apprehensions that the wheat crop in these areas would be damaged and cause price hikes and inflation.

 

"Even if China harvests less wheat this year, prices will remain stable due to the huge reserves and protective grain policies," said Hu Bingchuan, a researcher with the rural development institute of the Chinese Academy of Social Sciences.

 

He said the government owns huge wheat reserves after yields grew for the six consecutive years till 2009.

 

The overall yield of summer grain was 123 million tonnes in 2009, up 2.2 % year on year, according to government statistics.

 

Though the weather vagaries will not affect overall output, they will hurt the wheat quality in some areas, thereby providing a niche market for US wheat, said Jing Zhuocheng, an analyst with Shanghai CIFCO Futures Co.

 

China imported 131,421 tonnes of wheat valued at US$33.9 million from the US in April, down 31.4 % from March, according to the customs.

 

A report released by the USDA last month said China may import about 900,000 tonnes wheat during the 2010-2011 period. On the other hand, Han said China will still remain a net wheat exporter, and international prices will have a limited impact on domestic prices.

 

"Except for soy, international grain prices have a very limited impact on China's grain prices," Han said.