Tuesday, May 12, 2009

The Debts of the Lenders: China Stockpiling Agriculture Products

China To Up Ag Goods Storage On Higher Stockbuilding

The Chinese government said Monday it will boost spending in the next
two years to increase its capacity to store more agricultural products as the
country has been expanding its state reserves.

The investments would create capacity to store 15 million tons of
grains, 1.75 million tons of edible oils, 400,000 tons of sugar and 500,000
tons of cotton, according to a statement issued by the State Council, the
country’s cabinet, published on the government’s Web site. The statement
didn’t specify the size of the spending.

China plans to purchase a total of nearly 70 million tons of grains and
soybeans at prices higher than those prevailing locally since last year’s
harvest to protect farmers’ interests. The government is being forced to hold
on to the stock because it is unable to deliver on its plan to sell at levels
“higher than the purchase prices,” due to the fall in rates triggered by the
global slowdown.

“Domestic agricultural product prices face high downward pressure,” the
government said in the statement.

The recent surge in soybean futures traded on the Chicago Board of Trade
may rovided some selling opportunity for the government, but that may not
come soon as large volume of imported soybean is expected to arrive in May
due to purchases ade earlier when prices were low.

The government will arrange CNY3 billion to support large scale breeding
of hog and cows to produce milk, and expand its reserves of locally made milk
powder, it said.

Source:CME Commodity News for Tomorrow


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