August 24, 2010

China's grain prices to stay stable despite global price hike

Increased international grain prices are not high enough to raise China's domestic prices, and ample domestic supplies will be able to meet the demand this year, according to the National Development and Reform Commission (NDRC).

An NDRC official pointed out that the international grain market is balanced in terms of supply and demand at present, and there is no possibility of sharp price increases.

The recent rise in global wheat prices is due to short-term market speculation, he said, adding that the prices would return to normal levels after speculative moves are phased out.

In July, international wheat prices rose significantly after Russia, a major wheat producing country, reported a sharp decline in wheat output following its worst drought in more than a century.

China could meet its demand for wheat, as most of its farms grow grains. A series of policy tools could also keep grain prices at balanced and reasonable levels this year, the official said.

However, the authority should pay special attention to the extreme weather conditions, which could cause a negative impact on agricultural production, he added.