National Food Trading Center said they would sell corns grew in north China in 2012 and imported during 2011 to 2012 to designated buyers. These designated buyers are some feed-processing enterprises and other processing enterprises. The choice of the buyer shows that this batch of corn’s quality has deteriorated, it’s not suitable for food, can only be used as feed.
Wenfeng Ma of Beijing Orient Agribusiness Consultants, one of the critics of China food inventory policy said that our stale grain had too much, we must sell with a cheap price.
Usually, China national grain reserves time is for three years at most and then turns the stale grains out to the market in order to make room for new grain. The whole system is designed by storage of grain to ensure stable prices, or in the case of natural disasters.
Nevertheless, poor quality, inventory of higher than the market price , storage facility in order to avoid too much loss and quote a high price. These factors result in a large number of inventory recent years . After clearing inventory and sales on Friday, China will launch a weekly regular food auctions.
According to the new data of International Grains Council，IGC, grain stocks of China are expected to further push up the global total inventory and in 2016-2017 crop year will be up to 474 million tons of new record. The IGC said nearly 200 million tons of inventory of China may be the highest level since 1999-2000 crop year, the number seemingly accounted for over 40% of the total global inventories.
This year, China has said it would cancel policy Of the minimum purchase price. Expectations of lower prices have made an impact on this year's grain cultivation. This month, China Vice Agriculture Minister has said that this year the northeast breadbasket of corn planting area reduced for the first time in 13 years.
After the news announced by China government, corn prices of China have fallen sharply. Currently, corn commodities’ price is 1691 yuan ( i.e.$258) per ton in Dalian Exchange, down almost 20% since the beginning of this year.
Last month, the official of United States Department of Agriculture warned that in the agricultural -support-policies, the Chinese government on the state-owned corn reserves could face more than $10 billion in paper losses.
The administrative work of China inventory reduction,for example, only give those enterprises’ import quotas who agree to buy at auction, has produced adverse consequences. Feed mills and food processing enterprises would rather buy or import fresh food with a cheaper price, and don't want to get the old stock sold back to the storage warehouse, and these old grain stocks will be considered as a new inventory.
And information lack of these specific storage content makes the amplification of distortion condition of grain reserve policy. There are a lot of chaotic phenomena in grain reserve system, rumers including cotton warehouses are full of old mattress, the granary mysterious fire before inspectors coming , etc.
