Sept. 15 (Bloomberg) -- China, the world’s biggest user of commodities, will stay self-sufficient in corn, wheat and other grains, and the autumn harvest will probably increase, said Zeng Liying, deputy director of the State Administration of Grain.
While corn imports may grow, the increase will not be significant, Zeng said at a conference today in Dalian. The country will keep policies to support farmers and maintain controls on the domestic grain market, she said.
Heavy rain and low temperatures have hurt corn, wheat and rice crops, contributing to gains in local prices. Corn futures advanced 18 percent in Dalian in the past year and wheat prices increased 25 percent in Zhengzhou. China imported the most corn in 14 years and sold 13.7 million metric tons from stockpiles in the north of the country. The government may not replace all the corn sold from inventories, Zeng said today.
“It’s really hard to gauge what the government may do, but my guess is they may not participate in the procurement of the harvest fearing that will drive up prices,” said Feng Lichen, general manager at Yigu Information Consulting Ltd. “It’s possible China may abandon its policy of maintaining a certain level of stockpiles,” he said yesterday before Zeng spoke.
While the government will buy corn for stockpiling should farmers have trouble selling, it won’t necessarily replenish inventories to the same level as before the auctions, Zeng said.
The government is determined to curb excessive speculation and hoarding, she said. While corn consumption will increase, supply and demand is balanced and price gains aren’t justified, she said. Corn for May delivery advanced 0.4 percent to 2,046 yuan ($304) per ton on the Dalian Commodity Exchange today. The most active contract climbed to 2,070 yuan per ton on Sept. 8.
The State Administration of Grain comes under the National Development and Reform Commission, the country’s top planning agency, and is responsible for regulation of distribution and administering reserves, according to its website.
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