China's total grain harvest in 2010 reached 546.41 million metric tons, the seventh consecutive annual record and an increase of 2.9% from last year's crop, the National Bureau of Statistics said Friday. Last year's grain harvest was up 0.4% from 2008.

The strong harvest is expected to relieve upward pressure on prices from concerns of shortages related to weather problems and global shortfalls. This year's summer grain harvest, which normally accounts for a third of the total, dipped 0.3%, aggravating concerns about full-year supply. But few signs of problems emerged during the autumn grain season, and government officials in recent weeks had widely signaled increased confidence.

The market had already factored in the news, with bellwether contracts on the Dalian Commodity Exchange little changed and the most-actively traded September soybean futures prices settling marginally higher.
A Time to Reap

A decade of Chinese grain harvests, in million metric tons

2010 546.4
2009 530.8
2008 528.5
2007 501.6
2006 498.0
2005 484.0
2004 469.5
2003 430.7
2002 457.1
2001 452.6

Sources: Dow Jones Newswires; China Statistical Yearbook

"The size of this harvest represents a rise to competitive levels despite the weather problems the country has experienced, but there's still room to be conservative about coming harvests," said Monica Tu, an analyst with Shanghai JC Intelligence Co.

Population increases, the exodus from rural to urban areas and increasing difficulties in finding arable land, which exert unrelenting pressure on grain production, have helped send agriculture prices on a year-long rally. In October food prices were a major factor in sending headline inflation to a two-year high, prompting a cascade of government policies in the past two weeks to try to roll back some of the price increases.

The bureau's announcement Friday was the first official declaration of the actual size of this year's supply. The autumn grain harvest totaled 391.99 million tons, up 4.8% from last year's level, it said.