September 16, 2010

Heilongjiang grain prices set to rocket

Prices of grains in Heilongjiang province, China's major food production base, are expected to climb this year as production cost has surged, rainstorms have reined a vast part of China, and international grain prices have risen.

The costs of planting each mu (1 mu = 1/6 acre) of corn has climbed RMB24 (US$3.56) from last year to RMB241.4 (US$35.84) this year. Likewise, the cost of growing soy has surged RMB22.2 (US$3.29) per mu of land to RMB183.3 (US$27.21).

In some provinces, the supply of grains has dropped after a period of bad weather, pushing the price of grains further up. Corn farm destroyed in the 2009 drought has led more enterprises to stock up much corn, the price of which is forecast to go up.

The prices of grains on the global market are also rising. The price of wheat futures quoted in Chicago Futures Exchange surged 25.6%, while the price of corn and soya futures quoted increased 8.1% and 6.4% respectively over last month.

On securing grain supply in China, experts say it's time for the government to raise the procurement price of grain on one hand, and to stock more grains on the other. A higher price will encourage farmers to plant more and sell more, which in return, helps to secure food supply.