November 29, 2004

Grain Stocks in China Fall Amid Lower Output, Higher Demand

Grain stocks in China have fallen to 150 million metric tons amid declining production and rising local demand, according to state media on Monday. The Outlook Weekly, a news magazine sponsored by the official Xinhua News Agency, said the stocks will be enough for five months of foodgrain needs.

The report, citing Li Chenggui, a researcher at the China Academy of Social Sciences, stated that grain stocks in 2003 were less than 30% of grain consumption that year, a level not seen since 1974, and about only half of the 59.4% average in the past 30 years.

Even if the country can achieve an output target of 455 million tons this year, it will trail the estimated demand of 490 million tons by 35 million tons in 2004, which needs to be filled by stocks or imports.

China has sharply reduced its grain exports and increased grain imports largely because of tightening domestic supply and steadily rising demand.

According to customs data, wheat imports recorded 5.97 million tons in the first 10 months of 2004, rising sharply from 320,158 tons in the same period last year. Meanwhile, wheat exports fell 57.5% to 729,445 tons from 1.72 million tons in the same period of 2003.

Corn exports totaled 1.93 million tons in the same period, down 84.2% on year. Corn imports were registered at a negligible 2,205 tons, despite being a huge increase over the 46 tons imported during the same period in 2003.

Rice imports totaled 615,480 tons in the period, more than triple the 194,065 tons imported during the same period of 2003, while rice exports fell 61.4% to 799,892 tons, falling from 2.07 million tons.

Li was cited in the report as saying that local grain prices in the coming two or three years will likely climb further, as it will take more than two years to increase China's grain production to a level satisfying its demand, and an even longer time to improve the stocks level.