December 18, 2008
China is likely to purchase a further 5 million tonnes of corn for state reserves to help farmers after a record bumper harvest, said industry sources and traders on Wednesday (Dec 17).
This will bring the total amount of corn the government is buying from farmers in the northeast to 15 million tonnes.
Officials from China's top planning body, the National Development and Reform Commission (NDRC), will meet representatives from major corn-producing provinces to discuss corn, said an industry source.
It was unknown if the NDRC would support corn exports, but traders are expecting Beijing to support corn exports of up to 5 million tonnes next year.
Corn areas such as Hebei and Shandong have also asked the central government to purchase some of the corn crop to help shore up prices, which have plummeted to the lowest point in nearly four years, traders said.
Farmers in many of China's corn areas had difficulties selling their harvest, partly due to weak demand from feedmills and processors, according to the state media.
The government's purchase of 10 million tonnes accounted for only 6 percent of the domestic harvest.
The government feared falling corn prices could hurt rural incomes and spark unrest in the industry. So far, purchases by the government's grain reserve firm Sinograin have failed to support prices. Local Sinograin warehouses were reluctant to purchase stocks so as to take advantage of falling domestic prices, traders said.
Sinograin had bought less than one-third of the amount the government had agreed to.