From Chinese Press

Global grain reserve needed

(China Daily)
Updated: 2010-10-21 07:51

Global corn prices have increased by 14.5 percent this month after a United States Department of Agriculture (USDA) report said the country's corn production would drop. The highest increase in corn prices in 37 years has caused panic across the world, says an article on www.china.com.cn. Excerpts:

For a couple of months, the Food and Agriculture Organization (FAO) and USDA both had been claiming corn production would increase this year. But just before the harvest season, USDA said the yield would instead drop, sending the global corn market in a tizzy. This is understandable because the US accounts for up to 60 percent of the global corn exports and controls the world corn market in more ways than one.

Recently China, another big corn producing and consuming country, imported about 61,000 tons of US corn. This is the first time in 15 years that China has made such a huge purchase of corn.

Moreover, the demand for corn in the US will increase, too, this year. The reason: the US government has stipulated that ethanol should make up a greater percentage of the fuel sold in the market.

Some people say the US is trying to make the best of a bad situation to make more money. Wheat and soybean prices are already up. Now the US wants to make a killing by artificially raising corn prices. No wonder FAO and USDA forecasts have been changing from time to time.

Such a situation will force countries that depend heavily on imports for food to produce more grains, causing further fluctuations in global grain prices. A better solution, as suggested by people with foresight, would be to establish global grain reserves to reduce the impact of climate change on agriculture.

                                                  (China Daily 10/21/2010 page9)