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China downplays grain imports

09/14/2010 @ 12:06pm

BEIJING (Dow Jones)--Top Chinese economic officials have in recent weeks issued a string of assurances about China's grain self-sufficiency, downplaying a surge in grain imports this year that could portend a potentially seismic shift in the global grain trade.
Because of China's economic size, such a change, even by small degrees, could mean millions of tons of grains diverted to the Asian giant, setting off far-reaching changes in global shipping and grain production trends.
The latest assurances, reinforcing those from other senior government officials, came Tuesday from Zhang Xiaogang, deputy director of the National Development and Reform Commission, the country's top economic planning agency.
"Apart from soybeans, imports of wheat, corn and rice, among other grains, have been small, not even 1% of the country's domestic output," the state-run Xinhua news agency quoted Zhang as saying at the World Economic Forum "Summer Davos" forum in Tianjin.
"Domestic grain prices basically won't be affected by the global market," he said.
In fact, China's grain imports have risen sharply this year.
Official data for the first seven months showed wheat imports at 1 million metric tons, double the level seen in the same period a year earlier. August data won't be released until next week.
Over the same period, corn imports have risen nearly 62 times to 281,971 tons. Rice is up 45%.
Additionally, customs data understate import levels by including only out-of-quota shipment volumes, analysts say. So far this year, corn imports from the U.S. have in fact exceeded 1 million tons.
Official customs data also indicate that Vietnam only exported about 30,000 tons of rice to China in the first seven months of 2010. But analysts and traders widely believe Vietnam has actually exported about 600,000 tons of rice to China from January-September this year, as rising Chinese demand and higher prices north of the border fuel smuggling.
Despite the potential impact of the rise in import numbers, however, the trend may not be immediately visible in prices.
China's grain reserves are well above the global safety standard of 18%, "adding strength to (China's) ability to control grain prices," Zhang said.
The government uses its grain reserves, the world's largest, to buffer domestic grain market volatility, and has so far succeeded in staving off a series of corn, wheat and other food price rallies this year.
China doesn't officially disclose its grain reserve levels, but the stockpiles are estimated at 45% of output levels.
-By Chuin-Wei Yap, Dow Jones Newswires; 8610 8400 7704; chuin-wei.yap@dowjones.com.
(END) Dow Jones Newswires
September 14, 2010 06:01 ET (10:01 GMT)
Copyright (c) 2010 Dow Jones Company, Inc.

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