Grain Storage Dilemma 30 Million Tons Emergency Storage

Although the national treasury is full of grain, China's corn, rice and wheat are expected to have another bumper harvest in 2014, while the market demand for grain is difficult to improve, and a new round of national grain collection and storage is imperative, which will make China's grain stocks set a new record again.

The China National Grain Reserve Management Corporation (hereinafter referred to as "China Grain reserves") recently announced that it is expected to free up about 30 million tons of warehouse capacity through policy grain sales, warehouse transfer, variety exchange, transfer and new warehouse capacity before the autumn grain goes on sale in November this year. in order to alleviate the contradiction of purchasing warehouse capacity.

The harvest of wheat and early rice in the first half of this year has already taken up a considerable amount of storage capacity. At present, the purchase of wheat to support the market has basically ended. As of August 25, a total of 25.34 million tons of wheat had been purchased in the market, three times that of the same period last year, and 2.71 million tons of early rice had been purchased in the market.

The USDA expects China's rice and corn production to hit new highs, while the market's digestion capacity is limited, putting great pressure on the storage capacity of China's grain reserves.

According to a research report released by the USDA in August this year, in the 2014-2015 market year, China's rice processing capacity is expected to be 144 million tons, the highest in the last five years, and the end-of-season inventory is 46.049 million tons. In the last five years, this inventory is only lower than the 46.826 million tons in 2012 and 2013. For corn, China's corn production is expected to be 222 million tons in the 2014-2015 market year, the highest in the last five years, and ending inventories reached 80.36 million tons, also a five-year high.

Ma Wenfeng, an analyst at Oriental Iger, told China Business Daily that the grain consumption market is not very good this year, the product sales of grain processing enterprises are not ideal, and catering consumption is greatly affected by the strict control of the "three public" funds. Even if there is an increase, it cannot be compared with previous years, and grain production this year is more likely to have a bumper harvest, and grain sales mainly rely on the state to support the bottom.

Another analyst, who spoke on condition of anonymity, told this newspaper that corn and rice have relatively great storage pressure this year. Corn has the characteristics of large market volume and concentration, while rice has huge output, including both early rice and late rice, and there are new grains all the year round. In addition, due to the impact of low-priced imported rice, there is also great pressure on collection and storage.

In order to vacate the warehouse, China Grain Reserve has stepped up policy grain auctions since mid-May. By mid-August, a total of 29.98 million tons of policy grain had been traded in three months. China Grain Reserve said that the target of selling 32 million tons by the end of October was expected to be completed ahead of schedule.

With regard to the release of grain from the warehouse, the medium-stored grain has been arranged to be released according to the maximum capacity, and 12.47 million tons have been organized. Three batches of inter-provincial warehouse transfer plans issued by relevant state departments are also being implemented efficiently. The first batch of 2 million tons of warehouse transfer plan has been completed ahead of schedule, the second batch of 2 million tons has been shipped 840000 tons, and the third batch of 6 million tons is planned to be shipped one after another to ensure the full completion of the transfer task by the end of the year. The central grain reserve said that more than 70 per cent of the tasks of variety exchange and temporary grain transfer of 5.05 million tons of central grain reserves have been completed, and the task can be completed on schedule by the end of September, which will free up more storage capacity for key producing areas.

In order to make way for new grain, the storage of grain did not hesitate to spend money. Although the prices of production and marketing are upside down and the gap between new and old prices is widening, from January to July this year, the Central Grain Reserve vigorously pushed the rotation of central grain reserves, resulting in a loss of 560 million yuan. by the end of July, 61% of the old grain production had been completed and 43% of the new grain had been imported, which was faster than in previous years.

Some analysts told our reporter that warehouse capacity is actually not a particularly big problem. The Chinese government has built a lot of grain warehouses before, and the people also have a large warehouse capacity. As long as the arrangements are reasonable and the management keeps up, the storage capacity of the state and the people can ensure the normal operation of grain. However, the necessity of adjusting the grain collection and storage policy is becoming more and more urgent. Grain collection and storage has raised the price of grain in China, a large number of foreign grain has entered China, and it is difficult to get out of the national treasury. This year, the state has carried out reforms in the collection and storage of soybeans and cotton. Instead of collecting and storing soybeans, they will be in the form of subsidies at target prices. If the implementation is effective, it may be implemented in staple grain varieties such as rice, corn and wheat. More importantly, by improving the retirement income of rural residents, so that farmers' livelihood security does not need land to rely on, so that land can be transferred to form large-scale cultivation, it is possible to restore the competitiveness of China's agricultural products in the international market.