China corn prices pop on official comments

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Corn prices in China are on the rise after comments last week from an agriculture ministry official highlighting the impact of last year’s end to price floors for the crop.

Xi Gensheng, director of macroeconomic research at the Ministry of Agriculture’s rural economics research centre, last week told the mainland newspaper China Times that the fall in corn prices over the past year had exceeded the ministry’s forecasts.

Mr Xi noted that the area of land used for corn crops in China had fallen beyond the drop of 10m mu (around 6.7m square km) targeted by the ministry, whether going by his own department’s estimate of a 30m mu drop or that of the National Bureau of Statistics pointing to a 20m mu decline.

The upshot to that fall has been recent buoyancy in corn prices despite the continued existence of massive oversupply due to previous years’ stockpiling efforts. On Monday the spot price for a tonne of corn on the Dalian Commodity Exchange rose as much as 2.2 per cent to Rmb1,648 ($239.34).

Prices are still down 32.1 per cent from their level at the start of 2015, however.

Grain output – a category that in China includes wheat, rice, corn, soybeans and even tubers – dropped 0.8 per cent in 2016 to 616.2m tons, according to data released in December by the National Bureau of Statistics.

That marked the first fall in China’s grain production since 2003, when a 5.8 per cent drop prompted authorities to adopt pro-grain policies the following year.

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