China’s corn farmers likely to hold on to crops in anticipation of increase in prices

Source:Reuters-Global Times Published: 2017/9/20 17:53:40

Corn farmers in China are likely to hold off on selling their latest crops, betting higher prices down the line in the world's No.2 producer of the grain will help them reap bigger profits.

As farmers in the northeastern corn belt start their second harvest without government price support, many are beginning to show the kind of appetite for risk that is common in major other agricultural powerhouses such as the US by potentially delaying sales.

That has sparked worries about short-term supply in China, triggering an unseasonal rally in markets, with physical prices of first-grade corn at the port of Jinzhou, Northeast China's Liaoning Province, in early September hitting their highest in two months at 1,720 yuan ($260.97) per ton.

"Farmers won't rush to sell their grains this year," said Meng Jinhui, a Beijing-based analyst with Shengda Futures.

Until last year, the government bought farmers' crops at a minimum price as part of a decade-long stockpiling program that has now been scrapped.

The move to hold on to crops comes after some farmers last year sold early in the season, missing an opportunity to make more money after prices later rallied.

"This year, I will wait for a couple of months after the harvest and see what prices will do," said a farmer in Baishan, Northeast China's Jilin Province, who gave his surname as Shan. He will start harvesting his relatively modest 1.3 hectares of corn in two weeks.

Jilin is the second-largest corn producer in China, with output of around 28 million tons last crop year.

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