China could double its subsidies this year to corn processors in the main producing area in the northeast in a bid to help the loss-making industry and stimulate consumption, industry sources said.
Corn processors with a capacity of more than 100,000 tonnes a year would be offered a subsidy of 200 yuan ($32) per tonne, double that offered last year, they said.
"Many processors in the northeast are shut down or making losses because of government stockpiles. Without subsidies, more will be closed," said one industry source from the processing industry, who declined to be identified.
Corn consumption by the industry fell 5.2 percent in 2013/14 to 47.6 million tonnes, the biggest drop in five years, after the government introduced its stockpile scheme, aiming to boost rural incomes and support domestic prices, which are now more than 30 percent higher than global prices.
Early this year, Beijing raised a tax export rebate for the industry in a bid to make exports more competitive. That could help push up consumption by processors to more than 50 million tonnes this year.
The sector - including companies such as Global Bio-chem Technology Group Co Ltd and China Starch Holdings Ltd - has the capacity to consume more than 80 million tonnes of corn a year.
The government began its weekly state sales on April 9, a month earlier than last year because of the record volume in state stockpiles.
However, sales so far have been sluggish. The government sold only 2,808 tonnes this week, 0.95 percent of the 295,481 tonnes offered, at an average price of 2,450 yuan per tonne.
That was down from last week, when 15,958 tonnes were sold out of the 311,449 tonnes on offer at an average price of 2,497 yuan.
This week, all of the 35,881 tonnes of imported US corn stocks were sold at an average price of 2,311 to 2,371 yuan per tonne for various grades.
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