China likely to reap bumper grain harvest in 2011

China is likely to reap another bumper grain harvest this year, with output rising 3 percent from a year ago to a record of more than 560 million tonnes, a senior government official said. "The country's total grain output may hit a record again, the eighth year with a bumper harvest," Zhang Xiaoqiang, deputy head of the National Development and Reform Commission (NDRC), told reporters on Wednesday at the World Economic Forum in Dalian.
The good grain harvest would help boost supplies and ease rising food prices, including pork and eggs. His speech was posted on the commission's website (www.ndrc.gov.cn). Food price rises have helped drive up the country's inflation to a three-year high in July at 6.5 percent and 6.2 percent in August. But bad weather in major corn areas still weighs on the final harvest due this month. The country's physical corn prices, already at a record, have accelerated rises over the past two weeks, traders said.
Early frost was forecast in the western part of the top corn area of Jilin over the weekend after frost hit Heilongjiang, also a top soy area, last week, China's weather bureau reported. In a report posted on its website (www.nmc.gov.cn.), the bureau also said persistent rain in parts of northern China would delay the grain. Rains since early this month would delay the corn harvest in the central province of Henan and has already pushed up local prices, the China National Grain and Oils Information Centre said in a report (www.grain.gov.cn).
"Corn supplies are very tight, some small feed mills cannot source enough corn, although big mills are still holding enough stocks for the end of October," said one trading manager with a major feed mill in Guangdong. Corn prices in Guangdong province, the country's major pig breeding area, rose more than 6.5 percent since late August to more than 2,600 yuan ($406.5) per tonne. Rising corn has also helped push pork prices steadily to record levels.
But traders do not expect Beijing to release its imported corn reserves to the market. Some 600,000 tonnes to 700,000 tonnes of US corn have already arrived and are being stored at state grain silos. The government has since the end of 2010 rebuilt its reserve level to about 12 million tonnes by buying domestic harvests after having sold more than 55 million tonnes to cover domestic shortfalls since 2008. Volume offered at weekly government auctions has decreased to below 100 tonnes since mid-August, down sharply from weekly offers of as many 1.7 million tonnes early this year.