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China running low on corn, executive says

08/17/2010 @ 7:09am

DJ UPDATE: Grain Executive: China Running Low On Corn Reserves
Chuin-Wei Yap - DJ - 1 hr 57 mins ago

(Adds government reductions in auction volumes, context, corn prices)

BEIJING (Dow Jones)--China's corn reserves are down sharply compared with last year, making it more difficult for the government to control corn prices, a senior grain industry executive told an industry conference in comments posted Tuesday on a website owned by state stockpiler Sinograin Corp.

"Although China's grain reserves are sufficient, its corn reserves have declined by a wide margin compared with last year," said Zheng Chunfeng, chief executive of Dalian Northern Grains Exchange Market Co.

Harsh weather conditions have cut into China's food security, a top priority for Beijing, triggering unprecedented levels of U.S. corn imports this year and threatening to break the country's six-year streak of record-level consecutive harvests.

While Zheng didn't specify percentages, he said that all of China's corn reserves stored in 2008 have been sold and that the country's corn reserves were currently "insufficient."

"This will certainly increase the difficulty the country faces in managing the corn market," he said.

China's corn consumption is rising by 3 million-5 million metric tons a year, outpacing supply, he added.

Zheng's speech was delivered last Friday.

The government has sharply reduced the amount of corn sold at a regular auction in Anhui province to 400,000 tons, down from the 1 million tons it used to offer, according to another report posted Monday on Sinograin's China Grains Network website.

Corn futures on the Dalian Commodity Exchange rose 0.3% Tuesday to settle at CNY2,041/ton, slowing slightly from a 1.2% gain posted Monday.

-By Chuin-Wei Yap, Dow Jones Newswires; 8610 8400 7704; chuin-wei.yap@dowjones.com.

(END) Dow Jones Newswires

August 17, 2010 06:07 ET (10:07 GMT)

Copyright (c) 2010 Dow Jones Company, Inc.

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