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Review & Outlook
The Market Prices of Grain and Oil Products will Stay High in 2004
According to the well-known industry specialists, the total supplies and consumptions of major grain and oil products in China in 2004 will be relatively balanced. The market prices of grain products and oil products will stay at the high level as the prices in the last quarter of 2003.
The total supply of major gain and oil products will be relatively balanced
Because of the continually structure adjustment of agricultural industry in the last several years and the natural disasters in 2003 in different regions, the total productions of major grain and oil crops in China in 2003 were less than the total consumptions. The storages of major grain and oil crops in the national designated warehouses continually decline. The large volume storage accumulated from the past has easily made up the gap of production and consumption.
Based on the estimates of the industry specialists, the total production of wheat in 2003/04 will be about 86.3 million metric ton (MMT) and the total consumption of wheat will be about 106.6 MMT. The total production of corn in 2003/04 will be about 116.7 MMT and the total consumption of corn will be about 125.1 MMT with the export of about 6 MMT. The total production of rice in 2003/04 will be about 111.9 MMT and the total consumption of rice will be about 138.6 MMT with the export of about 2.1 MMT. The total production of soybean will be about 16.5 MMT, the total import of soybean will be about 20 MMT and the total consumption of soybean will be about 35.8 MMT in 2004. The difference of the supply and demand for each crop will be continually made up by the large volume storages. According to the international standards, the storage levels for those major crops at the end of 2004 in China will be still at the safe side.
It is expected that the productions of major grain and oil crops will be maintained at the 2003¡¯s level. Although the market prices have significantly increased in the last quarter of 2003, the profits from producing the major grain and oil crops are still relatively lower as compared with producing other cash crops. The farmers are likely continually doing what they are doing. However, if the weather is better in 2004 the production for some crops such as corn and soybean could be significantly increased.
The market prices for major grain and oil products will stay at the relatively high level. The continually growth of economy and households¡¯ income will support the consistently increasing demand for agricultural products. At the present, it will be very difficult to improve the efficiency and profitability on crop production in China, therefore, the supplies of grain and oil crops would not change too much. The international markets for major grain and oil crops are experiencing the new cycle of price increasing. All of those factors have determined that the market prices for major grain and oil products in China will be maintained at a higher level with some trends of slightly increasing in near future.
The import of grain and oil products will increase while the export will decrease
During the first 10 months of 2003, the total export of grain products in China was about 2 billion USD, increased more than 10 times from the same period in 2002. The major reasons were that the domestic prices for grain products were lower, the Chinese government strongly promoted the export of the grain products and the national grain storage was too high. The increasing market prices for major grain and oil products will attract more supplies to switch from the export market to the domestic market. The export of grain products will significantly decrease in 2004. On the other hand, the import of grain products will increase, but not too much. The import of oil crops such as soybean and rapeseeds will be maintained at the high volume with slightly increases in 2004.
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