Interpretation of china's 2014 no.1 central document about policies of corn and related productsDocument Transcript
Interpretation of China's 2014 No.1 Central Document about policies of corn & related
Tag: corn import, corn starch, corn oil, corn gluten meal, starch sugar, temporary reserve of
frozen pork, China's 2014 No.1 Central Document
Summary: According to China's 2014 No. 1 Central Document, the government will continue
to carry out polices about temporary reserve of corn and sugar, and minimum purchasing price
of wheat, explore price insurance pilot of live pigs and launch price subsidy pilot of soybean.
On 19 Jan., 2014, the Central Committee of the Communist Party of China and the State
Council jointly published a policy on deepening the rural reform and accelerating the
agricultural modernization (China's No.1 Central Document, focusing on the development of
agriculture, rural areas and farmers to push forward agricultural modernization), which
proposes that the government will continue to carry out the policies about temporary reserve of
corn and sugar, and minimum purchasing price of wheat, explore price insurance pilot of live
pigs and launch price subsidy pilot of soybean.
Governmental purchase of corn for temporary reserve
The government strengthened the protection in 2013. Firstly, the government extended the
2012/2013 corn purchase deadline by one month. Secondly, the government published the
2013/2014 purchasing price of corn in advance and increased the purchasing price. These
policies can protect the corn price from decreasing in China. For example, domestic market
price of corn decreased in Oct. 2013 due to the increasing supply of corn, but the price of corn
rebounded a little during Nov.- early Dec. 2013 as the governmental purchase of corn started
in Nov. 2013.
Insiders think that the corn purchasing policy is of great importance to stabilize and even
increase corn price in 2014 in case of its oversupply. It's reported that during 2013/2014, the
supply of corn may be around 205.7 million tonnes while the demand for corn may be only
around 187.7 million tonnes in China.
Governmental purchase of sugar for temporary reserve
Domestic sugar market underwent a downturn in 2013. The total output of sugar in China was
3.0 million tonnes while the sales volume of sugar was only 1.6 million tonnes. Due to the
oversupply, domestic average market price of white sugar, a main kind of sugar, dropped by
around 14% year on year in 2013. Its price continued decreasing in Jan. 2014, close to the
production cost level.
The slumping sugar market dragged down the price of its substitute, starch sugar in 2013. In
detail, domestic average ex-works price of high fructose corn syrup (F42) declined by 12.5%
year on year in 2013.
Domestic sugar market still will face challenges in 2014, since it is difficult to mitigate the
overcapacity of sugar at home and abroad. Additionally, domestic sugar will has less cost
support as the minimum purchasing price of its raw material-sugarcane in main sugarcane
planting regions in 2013/2014 is lower than that in 2012/2013.
Overall, insiders said that the governmental purchase of sugar for temporary reserve is
necessary in China as it can help protect sugar manufacturers' profits and boost the sugar
Minimum purchasing price of wheat
It is estimated that the role of policy will weaken in wheat market in 2014 because wheat price
in China has been much higher at present compared with that in 2013. According to data from
CCM, domestic market price of wheat soared to around USD425/t on 16 Jan., 2014, about
USD32/t higher than that on 16 Jan., 2013. Besides, the governmental storage of wheat
decreased in 2013 as the consumption of wheat increased greatly in feed industry in 2012,
leading to the tight supply of wheat since then. So the wheat price in 2014 mainly depends on
its supply and demand.
However, the increasing wheat price will cause wheat replaced by corn in feed production.
Exploration of live pigs' price insurance pilot
Domestic average market price of live pigs decreased slightly by 2% year on year in 2013, and
the market price of live pigs fell sharply from USD2,403/t on 3 Jan., 2014 to USD2,061/t on 20
Jan., 2014 due to the oversupply of live pigs. The substantial decreasing price of live pigs
resulted in losses for domestic pig breeding farmers or enterprises.
Once the price insurance policy can be implemented in the near future, domestic pig breeding
farmers or enterprises can obtain some extra compensation from the government when the
price of live pigs decreases, which can make up somehow for the losses, reduce their
breeding risk and maintain a stable cash flow.
Generally, a stable development of pig industry can ensure a strong demand for feed and feed
additives, such as amino acid and vitamin.
Launch of price subsidy pilot of soybean
In fact, it is the first time for China to implement the price subsidy pilot policy of soybean. China
carried out the temporary purchase of soybean for reserve during 2008-2013, and the
governmental purchasing price of soybean kept increasing in this period. As a result, domestic
price of this product was much higher than that of the imported one. So domestic soybean
processing enterprises turned to the cheap imported soybean. As data from China Customs
shows, China imported around 63.4 million tonnes of soybean in 2013, up 8.6% year on year.
Insiders said that the policy can weaken the dependence on imports for soybean and
encourage domestic farmers to plant soybean.
Source: Corn Products China News issued by CCM in Feburary.
Table of Contents of Corn Products China News 1402:
China returns 2,000 tonnes of GM DDGS to the US
Chinese corn products Imp. & Exp., Nov. 2013
Export volume of China's furfural rebounds, Oct.-Nov. 2013
Price update of corn products, Jan. 2014
Review of the ex-works price of corn germ meal, H2 2013
Ex-works price of xanthan gum decreases sharply in 2013
Guangji Pharmaceutical suspends partial VB2 production line
Shandong Longlive opens online flagship shop at Tmall
Frequent outbreaks of avian influenza challenges poultry industry again
Edible ethanol industry undergoes downturn in 2013
Market price of wheat in China enjoys marked uptrend, June-Nov. 2013
Corn Products China News, a monthly publication issued by CCM on 20th, features “Supply
and Demand”, “Import and Export Analysis”, “Price Update”, “Market & Company Dynamics”,
“Policy”, “Corn Supply” and other more information researched and reported by CCM’s
professional journalists. It is a reliable intermediate for you to know more about the corn
industry in China even in the globe.
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