Read more articles from Richard Brock

China will continue to purchase grains and soybeans from farmers in 2010, raising its minimum purchase prices for some crops in an effort to protect farmers’ interests and stabilize grain output, the country’s State Council said on Monday in a statement published on the central government's Web site.

The government said it will raise its minimum purchase prices for wheat by 60 yuan (CNY)/metric ton, or 3.4%, next year to CNY1,720-1,800/ton, according to a report posted after Monday’s meeting chaired by Premier Wen Jiabao.

Minimum prices for rice will be increased accordingly, and the government will continue to purchase corn, soybeans and rapeseed from farmers to protect their interests, it said.

The government did not say at what prices it will stockpile soybeans. Last year’s soybean purchases were made at above-market prices and helped lead to a surge in lower priced imports.

Traders told Reuters News Service the government was likely to offer prices higher than last year, when it bought more than 6 million metric tons (mmt) of soybeans at CNY3,700/ton and 36 mmt of corn at CNY1,500/per ton for state reserves.

China's national grain stocks have been growing since the 2008 harvests due to the government's large volume of purchases, and as a result, grain prices so far this year have been mostly decided by the government's policies.

The country completed a nationwide inventory of grains recently, showing that its state-owned enterprises held a total of 225.4 mmt of raw grain as of the end of March 2009.

Grain stocks at state-owned enterprises and in farmers' hands account for the main part of China's total grain stocks.

Vice Premier Li Keqiang said recently that China will increase its grain storage capacity by another 15 mmt by the end of 2010.

Editor’s note: Richard Brock, Corn & Soybean Digest's marketing editor, is president of Brock Associates, a farm market advisory firm, and publisher of The Brock Report.