China May Purchase 10 Million Tons Corn to Boost Farm Incomes
China may buy at least 10 million metric tons of corn from local farmers to revive prices and boost rural incomes, two executives at state-owned companies said.
The purchases would double earlier plans to buy 5 million tons, said the executives, who declined to be identified as state reserve actions are considered secret. The corn would be worth 15 billion yuan ($2.2 billion) and represent about 6 percent of the forecast total crop.
China said Oct. 20 it would buy an unspecified amount of local soybeans and corn to help farmers prevent losses after prices plunged. The effort has so far failed to revive slumping agricultural markets, and local officials are lobbying the central government to boost the rescue, analysts said.
“The market is pinning all its hope on the government, but the government has left the market guessing,” Cao Yanhui, analyst at Liaoning Cifco Futures Co., said by phone from Dalian. “If prices keep slumping, then it’s certain that they have to take more aggressive measures.”
The government is still meeting an original target to buy 1.5 million tons of soybeans, and has not decided on the level of any increase, the executives said.
China may harvest 156 million tons of corn and 16.5 million tons of soybeans this year, the China National Grain and Oils Information Center said Nov. 12.
Corn for May delivery on the Dalian Commodity Exchange fell 6 yuan, or 0.4 percent, to 1,594 yuan a ton at the 11:30 a.m. local time break. The contract yesterday gained 8 yuan, or 0.5 percent, after jumping as much as 1.1 percent, amid speculation about state purchases.
Soybeans for May delivery in Dalian fell as much as 125 yuan, or 3.8 percent, to 3,164 yuan a ton and were at 3,180 yuan at the break. Most-active futures have plunged 39 percent from a record 5,241 yuan a ton on July 3 amid a global plunge in agricultural commodities.
The government would pay 3,700 yuan a ton for soybeans and 1,500 yuan for corn in northeastern China, the National Development and Reform Commission said in a statement on its Web site Oct. 20.
Tags: corn, farmer