On
19 Jan., 2014, the Central Committee of the Communist Party of China and the
State Council jointly published a policy on deepening the rural reform and
accelerating the agricultural modernization (China's No.1 Central Document,
focusing on the development of agriculture, rural areas and farmers to push
forward agricultural modernization), which proposes that the government will
continue to carry out the policies about temporary reserve of corn and sugar,
and minimum purchasing price of wheat,
explore price insurance pilot of live pigs and launch price subsidy pilot of
soybean.
Governmental
purchase of corn for temporary reserve
The
government strengthened the protection in 2013. Firstly, the government
extended the 2012/2013 corn purchase deadline by one month. Secondly, the
government published the 2013/2014 purchasing price of corn in advance and
increased the purchasing price. These policies can protect the corn price from
decreasing in China. For example, domestic market price of corn decreased in
Oct. 2013 due to the increasing supply of corn, but the price of corn rebounded
a little during Nov.- early Dec. 2013 as the governmental purchase of corn
started in Nov. 2013.
Insiders
think that the corn purchasing policy is of great importance to stabilize and
even increase corn price in 2014 in case of its oversupply. It's reported that
during 2013/2014, the supply of corn may be around 205.7 million tonnes while
the demand for corn may be only around 187.7 million tonnes in China.
Governmental
purchase of sugar for temporary reserve
Domestic
sugar market underwent a downturn in 2013. The total output of sugar in China
was 3.0 million tonnes while the sales volume of sugar was only 1.6 million
tonnes. Due to the oversupply, domestic average market price of white sugar, a
main kind of sugar, dropped by around 14% year on year in 2013. Its price
continued decreasing in Jan. 2014, close to the production cost level.
The
slumping sugar market dragged down the price of its substitute, starch sugar in
2013. In detail, domestic average ex-works price of high fructose corn syrup
(F42) declined by 12.5% year on year in 2013.
Domestic
sugar market still will face challenges in 2014, since it is difficult to
mitigate the overcapacity of sugar at home and abroad. Additionally, domestic
sugar will has less cost support as the minimum purchasing price of its raw
material-sugarcane in main sugarcane planting regions in 2013/2014 is lower
than that in 2012/2013.
Overall,
insiders said that the governmental purchase of sugar for temporary reserve is
necessary in China as it can help protect sugar manufacturers' profits and
boost the sugar market.
Minimum
purchasing price of wheat
It
is estimated that the role of policy will weaken in wheat market in 2014
because wheat price in China has been much higher at present compared with that
in 2013. According to data from CCM, domestic market price of wheat soared to
around USD425/t on 16 Jan., 2014, about USD32/t higher than that on 16 Jan.,
2013. Besides, the governmental storage of wheat decreased in 2013 as the
consumption of wheat increased greatly in feed industry in 2012, leading to the
tight supply of wheat since then. So the wheat price in 2014 mainly depends on
its supply and demand.
However,
the increasing wheat price will cause wheat replaced by corn in feed
production.
Exploration
of live pigs' price insurance pilot
Domestic
average market price of live pigs decreased slightly by 2% year on year in
2013, and the market price of live pigs fell sharply from USD2,403/t on 3 Jan.,
2014 to USD2,061/t on 20 Jan., 2014 due to the oversupply of live pigs. The
substantial decreasing price of live pigs resulted in losses for domestic pig
breeding farmers or enterprises.
Once
the price insurance policy can be implemented in the near future, domestic pig
breeding farmers or enterprises can obtain some extra compensation from the
government when the price of live pigs decreases, which can make up somehow for
the losses, reduce their breeding risk and maintain a stable cash flow.
Generally,
a stable development of pig industry can ensure a strong demand for feed and
feed additives, such as amino acid and vitamin.
Launch
of price subsidy pilot of soybean
In
fact, it is the first time for China to implement the price subsidy pilot
policy of soybean. China carried out the temporary purchase of soybean for
reserve during 2008-2013, and the governmental purchasing price of soybean kept
increasing in this period. As a result, domestic price of this product was much
higher than that of the imported one. So domestic soybean processing
enterprises turned to the cheap imported soybean. As data from China Customs
shows, China imported around 63.4 million tonnes of soybean in 2013, up 8.6%
year on year.
Insiders
said that the policy can weaken the dependence on imports for soybean and
encourage domestic farmers to plant soybean.
China
returns 2,000 tonnes of GM DDGS to the US
Chinese
corn products Imp. & Exp., Nov. 2013
Export
volume of China's furfural rebounds, Oct.-Nov. 2013
Price
update of corn products, Jan. 2014
Review
of the ex-works price of corn germ meal, H2 2013
Ex-works
price of xanthan gum decreases sharply in 2013
Guangji
Pharmaceutical suspends partial VB2 production line
Shandong
Longlive opens online flagship shop at Tmall
Frequent
outbreaks of avian influenza challenges poultry industry again
Edible
ethanol industry undergoes downturn in 2013
Market
price of wheat in China enjoys marked uptrend, June-Nov. 2013
Corn
Products China News, a monthly publication
issued by CCM on 20th, features “Supply and Demand”, “Import and
Export Analysis”, “Price Update”, “Market & Company Dynamics”, “Policy”,
“Corn Supply” and other more information researched and reported by CCM’s
professional journalists. It is a reliable intermediate for you to know more
about the corn industry in China even in the globe.
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is dedicated to market research in China, Asia-Pacific Rim and global market. With a
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