that'd be a big call if correct, u might be under estimating...

that'd be a big call if correct, u might be under estimating China's grain reserves put at 170mt. I've pasted in a few points written by a colleague of mine who has good contacts in the Chinese ag sector, particularly interested if you have any thoughts on the third point.


1) the current year grain price is largely determined by the previous-year output. It has been always the case. The current year yield would affect grain price only in Q4 and the following year.
2) China grain output last year is the fifth consecutive year of great harvest, up by 5.4% to 529 million tone, historical record. Market grain prices to the change in supply and demand is very sensitive.
3) As a large country, China agriculture suffers different kinds of disasters every year. Like last year, there was 50-year worst snow storm in spring. This year serious drought. chatting with MoA official, this year it should not be a particular bad year for weather. It is still hard to come to the conclusion the current drought would suffer the grain production a lot. Instead, the government at this stage worries about more grain price falling (market price) than price shooting.
4) I just checked with my friend who works in a state-grain procurement station in Fujian that state procurement prices this year is Rmb106 per 50kg, but market price is now down to Rmb86 per 50kg from around Rmb100 per 50kg before the autumn harvest last year. This is because, the state grain procurement station only buy the quota in line with contracts with farmers. Farmers have to sell their grain to free market.