August 8, 2006

Prices of China's grain flat, hog on upturn

Prices for China's grains and agric-products are seen flat for the rest of the year ahead, based on report from the country's Ministry of Commerce lately.

With the third bumper summer harvest in China, domestic grains reached a total of 113.8 billion kilogrammes, increasing 7 percent to 7.4 billion kg. For a supply-demand equilibrium, China's 2006 total grains output will have to increase significantly compared with 2005, unless poor weather occurs. 

In the light of weaker soybean and soy-product prices amid high costs, farmers' reluctance to plant soybeans will shrink soy planting acres. This will keep the pressure lid down on prices, halting any momentum for further a price rally on the back of high imports and domestic oversupply. 

The report released said that although the supply of agri-products remains ample, the possibility of a volatile fluctuation in certain regions or in the short term cannot be dismissed. In the first half of this year, China's meat output for pork, beef and poultry totalled 36 million tonnes, up 4.4 percent from the year-ago period.

Live hog prices in China had started to rise on tight supply as total hog inventory in major hog farms fell 13.6 percent from 2005. Live hog prices can be expected to continue on recovery in the next half of the year.