BEIJING, Nov 10 (Reuters) – China is considering offering subsidies to feed mills to increase domestic corn consumption, while also trying to sell down its massive state reserves of the grain at discounted prices, industry sources said.
The National Development and Reform Commission (NDRC), the country’s top planning body, has also proposed cuts to the state corn support price to farmers for the 2016-17 crop year, they said.
The NDRC was still discussing the details of any further measures during a meeting in Beijing on Tuesday, the sources said, but worries over even more price cuts pushed down corn futures on the Dalian exchange from the two-month high it hit on Monday.
Read Also
Field-by-field mapping could improve yield, productivity predictions
University of Saskatchewan researchers are using field border mapping to collect data on field variability, including problematic weeds, and to predict things like yields.
“There is lots of bearish news in the market today. The destocking measures and price cut have put the May 2016 contract under pressure,” said Xu Xiaoyan, an analyst with Guohai Liangshi Futures Co Ltd.
The most-traded May contract was down 2.3 percent at 1,848 yuan (US$290.50) per tonne on Tuesday, after hitting 1,912 yuan per tonne in the previous session, the highest mark since mid-September.
Speculative funds have also built up near-record positions on the contract on expectation of policy changes after the government ends its stockpiling scheme by end-April next year, said Xu.
Current open interest was at 1.277 million lots, just below the all-time high of 1.29 million lots on Oct. 13.
Beijing is also considering offering freight subsidies for feed mills in southern provinces, said Zhang Yan, an analyst with Shanghai JC Intelligence Co Ltd.
China, the world’s second largest corn consumer, is estimated to hold more than 200 million tonnes of corn in state reserves, equivalent to more than one-year of its domestic consumption.
China will also encourage downstream industries in the major consuming areas to buy corn from northeast areas and build stocks, authorities said in a statement posted on the State Grain Administration website on Monday.
