China, the world's second-largest corn consumer, will limit corn consumption in non-feed sectors to ensure supply for animal feed mills and to help control prices, corn traders and local media reports said.
Beijing has asked banks to halt loans to companies, excluding state stockpiling agencies that would have used the funds to buy corn for non-feed processing purposes, local media reported.
The government has released millions of tonnes of corn from stockpiles to reduce supply pressures, but China's corn prices have still risen about 17% since the start of October, when food inflation started to gain significant momentum.
Limitations for non-feed use
The government will limit the amount of corn available to non-feed processors to their consumption volume in 2009, traders and media reports said.
Tax policies for corn processors will be adjusted, and the government will encourage consolidation of the sector, they said.
An unnamed analyst said in the media reports that a sharp rise in corn demand has largely been due to processing needs, hence the industry - rather than corn's more traditional livestock consumers - is being targeted in the latest round of price controls.
"Non-feed corn processing demand could reach 50 million tonnes in the current crop year, while feed demand could reach 100 million tonnes," the China Business News report said, citing data from research house Cngrain.com.
Non-feed corn use has been rising as a portion of total corn demand, to 29% from 11%, while use in animal feed production accounts for 61%, down from 74%, the news agency said, without citing a time frame.
Source: Dow Jones Newswires