Cotton prices also likely to recover slightly, but not by enough to shore up production levels

China, the world's largest food consumer, is expected to reap a bumper grain harvest this year, with a 10th consecutive grain yield increase, according to a forecast by a top government think tank.

However, the country's cotton growing areas are expected to see a second decline since 2011, which is likely to dent cotton production this year, the report added.

Increased grain yields will play a significant role in stabilizing food prices in China, an agricultural analyst said. And given its huge cotton stockpile, cotton prices are likely to remain stable.

The country's grain growing area is forecast to expand by 663,000 hectares from 2012, to 111.93 million hectares this year.

Its grain yields are likely to increase by 7.5 million metric tons from last year, with "neutral or less optimistic weather conditions and without natural disasters", according to a report by the Center for Forecasting Science at the Chinese Academy of Sciences. This would put the country's grain harvest this year at 597.5 million tons, which would represent the 10th consecutive year of increased national grain output.

"Measures implemented by the government will continue to support the country's grain production," said Yang Cuihong, a professor at the academy.

"Better agricultural technology, which has been employed in the agricultural industry in recent years, will also play its part in boosting grain yields this year," she said.

On the prediction for cotton, Yang said, "The domestic cotton price hovered at a low level throughout 2012 and this will blunt farmers' enthusiasm for planting cotton this year."

Demand from the textile industry is likely to recover moderately from 2012, but will still not be strong enough to shore up cotton production, Yang said.

"The government should introduce measures to support cotton production, and improve cotton farmers' productivity by equipping them with better machines," she said.

Gao Yanbin, a senior analyst with Jinshi Futures Co, said: "Thanks to the low cotton price last year, wheat now brings more income for farmers than cotton. That's why some farmland, which used to grow cotton, is now planted with wheat."

But the government's cotton stockpile is large enough to stabilize the cotton price whenever necessary, Gao added.

China's cotton growing areas declined by 4.1 percent in 2012 from a year earlier, industry data show. Yet cotton production last year still grew by 3.8 percent from 2011, thanks to increased yields per hectare.

The nation's cotton reserve is expected to reach 9 million tons this year, as it may have bought 5 million tons for reserves in 2012, compared with 3.2 million tons a year earlier, industry data show.

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(China Daily 01/29/2013 page14)