China fears tight supply may hit grain stability
Tight supplies in key categories and rising global prices are making it difficult to stabilise China's domestic grain market, the governing authority said yesterday.
Nie Zhenbang, head of the State Grain Administration (SGA), said the country's food supply is secure and grain reserves are abundant following four successful harvests.
"But it is still a challenge to keep the market balanced over the long term," Nie said at a conference in Beijing.
He said supplies of some key grain categories, including corn and soybeans, have tightened and that there are even shortages in some major grain markets.
China consumed 517 million tonnes of grain last year, amid a shortage of about 16 million tonnes of certain grains, including corn and soybeans, SGA figures show.
The country produced only 9.62 million tonnes of cooking oil last year, about 42 per cent of the regular annual demand of 23 million tones.
"As consumption grows and shortages spread, grain imports have been increasing. There is huge pressure to secure the supply of cooking oil and keep prices stable," Nie said.
In addition, with China becoming more integrated into the global economy, changes in the world market are increasingly affecting the domestic one, Nie said.
The United Nations' Food and Agriculture Organization (FAO) has estimated that the global grain market will continue to face supply pressures, and that grain prices will remain high due to surging energy prices and increasing demand for corn and soybeans to make bio-fuel.
The global food reserve dropped to its lowest level in 30 years last year, FAO figures show.
Driven by the high global prices, China's wheat exports increased by 200 per cent year-on-year in the first 11 months of last year. Corn exports grew by 85 per cent during the period, while those of soybeans expanded by 24 per cent, according to customs figures.
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