The Chinese government has offered subsidies to processors of some 5.77 million tonnes of corn in four provinces in the north-east, a government document seen by Reuters said. A subsidy of 150 yuan ($21.96) per tonne was offered to corn processors with annual capacity of at least 100,000 tonnes, including processors owned by China Agri-Industries Holdings Ltd and Fufeng Group Ltd. The subsidies will extend from September to December for each plant, analysts said.
"The policy is one of the measures to raise production rates at processors and help reduce their losses," said the Heilongjiang Grain Bureau in a report on its website (www.hljlsj.gov.cn). Processors in Heilongjiang province will receive subsidies on 1.96 million tonnes while those in Jilin will receive subsidies on 2.53 million tonnes.
The remainder covers processors in Inner Mongolia and Liaoning provinces, the document said. The government had also sold a total of 7.7 million tonnes of corn by Tuesday at weekly auctions to processors and feed mills. Expectations that this year's harvest will be hurt by drought in the north-east corn belt led to higher sales on Tuesday.
Beijing has also agreed to offer subsidies to crushers in Heilongjiang province to process two million tonnes of domestic soya reserves after bidders showed little interests in weekly state auctions, said one official with a major crusher. The official confirmed earlier Reuters' reports that three to four crushers in the province would get 200 yuan per tonne to process that amount of soyabeans. "With the fall of the CBOT prices, we do not think the subsidy amount is attractive as compared with imports," said the official.
US soyabean futures fell 8 percent to a one-week low on Tuesday amid good US crop weather and pressure from tumbling equities and crude oil markets. The new US crop for December shipment was calculated at about 3,600 yuan per tonne, 4.2 percent lower than the bidding price set by Beijing for domestic soya reserves.