China wants to mine rice and wheat reserves and thus face high corn prices

China plans to sell rice and wheat from its state reserves to feed manufacturers as they suffer from sharply higher corn prices. In some regions of China, corn has already become 20% more expensive and there are already bottlenecks.
In the first batch, Beijing plans to outsource 10 million tons of rice to get the corn price under control again. In China, it has now reached a five-year high. Until two years ago, the government had made great efforts to reduce its gigantic corn stocks.
Heavy rain and flooding as well as cold weather are now endangering the corn fields in southern China and thus contributing to the bull market.
Importers have already bought corn in the United States, which also fulfills Beijing's promise to buy from the first part of a trade agreement between China and the United States.
The planned sale from China's state reserves means that rice will be sold directly to the feed manufacturers at a price of 1,000 yuan / ton. ($ 1 = 6.9940 yuan) This is only half as much as the current market price. To do this, buyers must guarantee that the rice will not reach the market. The feed would only be competitive on the market with such cheap rice.
Depending on the market situation, further outsourcing of rice and wheat should take place soon.
A minimum price system for wheat and rice has been in place in China for years. As a result, state stocks grew. The stock is now said to be as large as the annual consumption of the Asian country.

Hansa Terminhandel GmbH
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