July 3, 2008

China grain supply currently balanced, slightly tight over the long term

China's grain supply and demand are basically balanced now, but supply will be slightly tight in the long term, state television Wednesday cited Premier Wen Jiabao as saying in a Cabinet meeting.

Wen said constraints on China's grain production, such as urbanization, are growing, whereas demand is rising, making it a challenge to ensure the nation's grain security.

Wen added China will improve its grain reserve system and will mainly rely on domestic supply for its grain needs. China will try to produce 95 percent of its grain needs, the report cited Wen as saying.

A directive released this week indicated that China would aim to control overall grain imports at 25 million tonnes. China's current soy import level is at 34 million tonnes, according to USDA estimates. This would mean China, besides cutting down import levels of other grains to zero, would also have to reduce soy imports by a further 9-million tonnes to achieve its goal. 

China is basically self-sufficient in corn, rice and wheat and was a nett corn exporter in recent years. However, the country earlier this year clamped down on exports as international prices rose, fearing further domestic inflation. Analysts expect China to be a nett corn importer in the years ahead due to rising demand from the agricultural and industrial sectors.