September 23, 2008

China's grain purchasing prices to rise moderately

Chinese experts forecasted that grain purchasing prices are unlikely to rise sharply, in view of falling global grain prices and domestic demand while expecting their fifth consecutive grain harvest this year.

According to the latest forecast of National Grain and Oil Information Centre, China's corn output may reach a record high of 156 million tonnes in 2008, up 4.17 million tonnes on year and soy output is likely to come to 17.5 million tonnes, 4.70 million tonnes more than 2007, up 36.72 percent.

Global grain prices have been falling and soy futures were quoted at US$1.139/bushel on September 18 on CBOT, much lower than the high point at over US$15 /bushel in April.

The current purchasing price for soy in northeastern China has fallen back to about RMB4,000/tonne.

Corn was purchased at RMB1,400 (US$204.84)/tonne in Northeast China at the start of the year. According to a survey by Jinlin Grain Group, production cost of corn increased RMB200 /tonne this year due to surging farming materials.

However, experts predict the purchasing price would not exceed RMB1,600/tonne this year.

Prices of wheat, corn, soy, and rice soared by 137.5 percent, 36.4 percent, 79.2 percent and 66.6 percent in March 2008, while the grain prices in China only rose by 6.8 percent during the same period, he cited.

China has no plans to liberalise the export of part of grain to ease the pressure on domestic suppliers, said an official with the State Administration of Grain.