BEIJING - Dalian corn futures extended their decline on Monday from a recent near four-month high, as market expectations Beijing may quicken sales of its record stockpile increased following a high-level policy meeting, analysts said.
The most-traded May 2016 contract was traded down 2.5 percent at 1,857 yuan ($286.25) per tonne on Monday, losing more than 5 percent over the past four days after touching a near 4-month high on Dec. 22.
China's top leaders held an annual meeting last week to map out plans for rural development in 2016.
"The signal from the central rural meeting indicates that the government will push the reform of its grain policy in a market-oriented direction, which is bearish for the current price," said Jiang Boheng, an analyst with Luzheng Futures Co. Ltd.
The government said it would cut domestic corn acreage from next year while speeding up reduction of inventories of the grain, the official Xinhua news agency reported last week, citing the annual Central Rural Work Conference that ended on Friday.
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Instead of aiming for bumper grain harvests, Beijing will focus on sustainable development of its agriculture sector, it said.
Xinhua did not give further details.
Beijing may start releasing old stocks at below-market prices after the Chinese new year holiday in early February, two to three months earlier than usual, analysts said.
The most-traded May 2016 corn starch contract fell by its daily limit to a more than 1-month low at 1,997 yuan per tonne on Monday.
Market talk is that Beijing may free up domestic corn prices and could scrap its stockpiling scheme as early as next year, said Xu Xiaoyan, an analyst with Guohai Liangshi Futures.
Beijing is expected to hold more than 200 million tonnes of corn in state reserves, equivalent to more than one-year of the country's annual consumption, after years of paying farmers artificially high prices for their crop.
Attempts to sell off its stockpiles have met with poor demand.
