CHINA can keep grain prices stable amid supply shortages and rising agricultural costs, a senior grain official said in Beijing on Monday.

There is rising price pressure for major grains in China this year as a result of deficient supplies, soaring agricultural product costs and fluctuations on the international futures markets, Zeng Liying, deputy director of the State Administration of Grains (SAG), told an industry meeting.

However, she added, China could ensure price stability thanks to abundant grain reserves.

The demand-supply gap has narrowed from 50 billion kg in 2003 to 15 billion kg at present, boosted by four straight years of bumper harvests in major grain production bases, she said.

The SAG has auctioned more than 50 billion kg of grain over the past two years, and it purchased 28.9 billion kg of wheat in 2007 to secure market supply, all based on minimum purchase prices, Zeng said.

The SAG predicted China's grain output would be about 500 billion kg in 2008, which would likely be the fifth consecutive year of large wheat harvest, Zeng said.

The extreme weather this past winter and severe drought that hit northern China this spring, during the ploughing season, will make it harder to ensure grain supplies this year, Chen Xiwen, director of the office of the central leading group on rural work, has said.

The country raised its minimum purchase prices for rice and wheat for a second time this year to spur grain production and curb inflation, which hit a 11-year high of 8.7 percent in February.

Premier Wen Jiabao earlier said that China, with 40 to 50 million tons of rice stocks, would not be greatly affected by global price hikes.

But as connections between the domestic and world grain markets have increased, it has become more difficult to maintain stable domestic prices, said SAG Director Nie Zhenbang.

Food price inflation has aroused growing concern worldwide. U.N. Secretary-General Ban Ki-moon on Monday called on the international community to take "urgent and concerted action" to tackle the growing global food crisis.

(Xinhua)