China changes its grain pricing - still many uncertainties With a few exceptions for decades on China's agricultural policy has been designed in to ensure the food supply through their own efforts. A growing population with increasing income, the growing middle and upper classes requires higher efforts with limited available agricultural area of 800 square meters per capita, the increasing earnings potential per hectare.
The State-guaranteed were in addition to a rising resources usage in the past 5 to 7 years minimum prices for corn and wheat systematically up to $350 per t increased. Production and inventories grew. But high prices caused almost open borders, that the demand for grain was introduced by the half as expensive international market in coastal regions. Borders were moved in until 2015. High feed costs domestically made uneconomical with the result that with the decline in the pig and poultry sectors grain consumption remained the finishing production.
The result was a growing state stock by more than the half of a whole harvest of the year. The partially inadequate management suggests that about 20% of the stocks are no longer usable.
The Government has announced several statements a lowering of the minimum prices on international level. The maize price should be reduced by one-third. Compensatory measures should access for affected farmers in northern China that were substantiated but still unspecified. The announcements come very late, because the sowing and their plans are already far ahead deep.
A moderate decline in the Chinese cereal production is expected for the year 2016/17. China's grain imports should clearly be taken back. Reduced livestock consumed for now less grain.
In spot trading, corn prices since few months vigorous broke, are still on an international level. Reduced feed costs result in high prices, finishing again increasing profitability. However, it will take years to bring livestock back to the old level. Make matters worse cause increasing environmental requirements that cause significantly higher investment costs than was required in previous periods.
The deliberate degradation of the stock likely will be resolved after a year . The Chinese world cereal trade will take place in smaller dimensions than was the case in the past. Notable Chinese influences on international pricing are tend not to expect it was because experience exceptional harvest results on the plan.
