The China Grain Reserves Corp. has been ordered to halt its trading business and companies that buy grain in excess of government limits will be fined, the State Administration of Grain said.
State-run Sinograin, as China Grain Reserves Corp. is known, should only engage in “stockpiling and rotating government reserves,” the agency said in a statement on its wesbite. The move is aimed at ensuring an orderly grain market and managing inflationary expectations, the statement said.
The measure to stabilize the market comes after grains, rubber, cotton and sugar prices in China gained to records this week as tight supplies stoked their investment appeal. Inflation gaining at the fastest pace in 23 months and increased liquidity after government curbs on property investments have fueled the rally in commodity prices.
“The move is to reduce the number of entities in the grains market,” Tian Feng, analyst at BOC International (China) Ltd. “The government doesn’t want those companies that receive subsidies to stockpile grains for the government to have their own sideline business at the same time.”
Sinograin handles stockpiling grains and oilseeds for the government as well as operating its own grain processing and trading business, according to the company website.
Qualified grain buyers will have to be registered properly and conduct their grain purchasing business within their stipulated areas, said the government statement, which was dated Nov. 4. Granaries may receive fines of as much as five times the value of the grain that exceeds the limit and risk having their business licenses revoked, the statement said.
“We will enforce a broad examination of all entities in the grain market,” the agency said. The examination will weed out those unqualified buyers from purchasing grains, it said.
(bloomberg.com)
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