December 20, 2011
China's State Grain Administration confirmed Monday (Dec 19) that it is stockpiling corn from farmers in major producing provinces to replenish state reserves.
The administration will offer RMB2,000 (US$316)/tonne to farmers in Liaoning province and Inner Mongolia Autonomous Region, RMB1,980 (US$312)/tonne in Jilin and RMB1,960 (US$309)/tonne in Heilongjiang, with no limit on volumes, it said in a statement.
The stockpiling programme is aimed at protecting farmers' interests and encouraging production, it said. The programme will last until April 30 next year.
The four regions are China's major corn producers, but not major consumption areas, and most of their products are shipped to southern China, where demand from feed mills is high.
"This suggests that the government has mandated a minimum price for corn," analysts said.
Corn prices in China's major producing provinces have fallen more than 15% since hitting a record in late September, after a record harvest pressured the market.
China's corn output this year rose 8.2% from 2010 to a record 191.75 million tonnes, the National Bureau of Statistics said earlier this month. The figure beat expectations of domestic analysts and the USDA.
Benchmark September corn futures on the Dalian Commodity Exchange closed the morning session up 0.5% at RMB2,262 (US$357)/tonne Monday.