November 19, 2008

China's recent adjustment on tariff rates on grain export is unlikely to have obvious effects in boosting prices of relative listed companies in the near future, according to an investment report issued by Founder Securities.

China will cancel export tariff on corn, soy, and wheat, and adjust down the tariff on rice from 5 percent to 3 percent as of December 1.

The current 10 percent of tariff rate on corn meal and starch export will also be abolished, and that on wheat flour and starch be lowered from 25 percent to 8 percent.

Founder Securities pointed out that China's tariff cut policy is mainly to push up grain prices and restore farmers' confidence over the market.

But as China's grain price fails to gain advantage over international price, the move has limited effect to spur grain price and the listed grain companies in short run, Founder Securities added.