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Senior executive confident of grain supply, relieving public worries about inflation

02-18-2011 09:45 BJT

GUANGZHOU, Feb. 17 (Xinhua) -- Chinese leading grain, cooking oil and food enterprise COFCO on Thursday tried to ease public concerns over inflation, saying China is able to stabilize grain prices this year thanks to "substantial reserves."

The message by Ning Gaoning, chairman of COFCO, came after soaring food prices drove up China's consumer price index (CPI), the main gauge of inflation, by 4.9 percent year on year in January.

Ning spoke to Xinhua Thursday on the sidelines of the first APEC (Asia Pacific Economic Cooperation) Business Advisory Council (ABAC) 2011 meeting, which started Tuesday and ended Thursday in Guangzhou, the provincial capital of Guangdong in south China.

"Even if the total grain output drops a little in China this year, it won't cause any catastrophic results," said Ning.

Ning expected China to have ample supply of rice and wheat in 2011 but the stock of corn would probably drop by the year end, with the corn inventory-to-consumption ratio likely to fall to 15.4 percent from last year.

China's grain output rose 2.9 percent year on year in 2010 to 546.41 million tonnes, of which summer grain output was down 0.3 percent year on year to 123.1 million tonnes while the autumn grain output rose 4.8 percent to 391.99 million tonnes.

The rice inventory-to-consumption ratio, a major measure of food reserve, has stood between 30 percent to 40 percent in China since 2008, which is much better than around 18 percent globally, according to COFCO data.

Rice and wheat are the two major grain crops in China.

Globally, the Food Price Index rose for the seventh month in a row to reach 231 in January, topping the peak of 224.1 last seen in June 2008, the United Nations Food and Agriculture Organization said Thursday.

The COFCO chairman attributed the world food price hikes to soaring global demands, and extreme weather in major grain producing areas, such as the massive snowstorms in the United States, floods in Australia and droughts in China.

Excessive liquidity in the market, inflationary expectations and speculation also helped push prices of global agricultural products higher, Ning said.

Commodity and grain prices are still far from their historic peak in 2008 before the global financial crisis, he said, adding: "We're not yet in a global food crisis."

Further, Ning said he himself disagreed with the perception that price increases of agricultural products were the source of global inflation because the recent hikes of farm produces came much later than those of petroleum, non-ferrous metals and other industrial products.

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