July 14, 2006

Rising production helps relieve tightness in Chinese grain market

A string of larger harvests in China has helped relieve tightness in the grain market and eased the sharp decline in stocks.

China's wheat production is now estimated at a 7-year high, as area has expanded and growing conditions have been exceptional.

As domestic demand stagnate, the crop is even expected to result in a buildup in stocks.

Ample supplies are also expected to reduce the need for imports--which are expected to be down by nearly half--and allow for greater exports.

Despite record corn crops in recent years, the situation remains tight as consumption continues to outstrip production.

Corn stocks are expected to continue to shrink and exports are expected to remain low.