China to pursue grain self-sufficiency and cut imports, says ING

BEIJING - China looks set to continue to rely more on its own production of grain and limit imports of the commodity to bridging temporary shortfalls as it pursues a program of achieving self-sufficiency, ING said in a research note, citing President Hu Jintao's recent speeches.
calendar icon 27 July 2007
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ING quoted Hu as saying that China 'shall more firmly build our grain security on the basis of relying on domestic production'. The investment house said this demonstrates a strong reluctance on the country's part to meet long-term grain shortfalls through increased foreign orders.

China last imported significant amounts of grain in 2004, when there was a significant production shortfall and grain prices spiked. This year's wheat harvest (has been so far) up 1.9 pct year-on-year, which lessens the likelihood of a grain price spike,' said ING in the research note.

It said China is likely to limit its imports of grain to bridging temporary supply-demand imbalances.

However, ING noted that the most pressing challenge for China is to contain soaring pork prices, which subject international grain prices to one-way upside risk.

'We expect food price inflation to remain high until the high base kicks in in the fourth quarter to make the year-on-year comparisons look better,' the note added.

It said recent soaring pork prices in China are the result of blue ear disease, which has so far killed 25 pct of the country's pig population.


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