Economy

Grain supplies ensured

By Feiwen Rong and William Bi (China Daily)
Updated: 2010-11-20 09:14

BEIJING - China will ensure adequate grain supplies to manage inflation after consumer prices advanced at the quickest pace in more than two years, with the result that more than 80 million people are expected to need food support this winter.

The government will increase packaged grain and cooking oil stockpiles ready for a timely release onto the market, Nie Zhenbang, director of the State Administration of Grain, said in a statement on the agency's website.

China will also sell some vegetable oil from its stockpiles next week to stabilize prices, said the administration.

Consumer prices gained 4.4 percent in October, the most since September 2008, and food prices climbed 10.1 percent. Chinese corn, sugar, and rice futures have reached records in the past two weeks on concern that supplies may lag demand.

Meanwhile, the country may put price caps on "important daily necessities" to contain inflation, the State Council said on Wednesday.

"The rally in consumer prices, especially food prices, may continue because it is not caused by shortages, but by monetary factors such as excessive liquidity," Li Maoyu, an analyst at Changjiang Securities, said in a report on Friday, adding "we estimate that consumer prices may peak in November at 5.1 percent, and the focus is continuing inflationary pressure in the first half of 2011".

US companies still want to do business Related readings:  Climate change 'takes toll' on grain harvest  China to increase grain supplies to combat inflation  Year's grain output 'on track'  Chinese vice-premier stresses efforts to guarantee grain supply

Around 81 million people in areas affected by natural disasters will need food support to see them through the winter-spring period, Xinhua News Agency reported on Friday, citing figures from the Ministry of Civil Affairs. The number of people in disaster-hit areas is 25 percent higher this year than the average figure for the past 20 years, the report said.

Corn on the Dalian Commodity Exchange rose to a record 2,419 yuan ($364) a ton on Tuesday. The same day rice on the Zhengzhou Commodity Exchange reached a record price of 2,558 yuan a ton, and sugar hit an all-time high of 7,521 yuan on Nov 9.

China's overseas corn purchases have surged this year, after the country became a net importer in 2009 for the first time in 14 years as drought damaged crops.

Bloomberg News