* Farmers starting second harvest since price-support scrapped
* Likely to hold crops in hope prices will climb
* That has sparked fears over short-term supply
By Hallie Gu and Dominique Patton
BEIJING, Sept 19 (Reuters) - Corn farmers in China are likely to hold off on selling their latest crops, betting higher prices down the line in the world’s No.2 producer of the grain will help them reap bigger profits.
As farmers in the northeastern corn belt start their second harvest without government price support, many are beginning to show the kind of appetite for risk that is common in major other agricultural powerhouses such as the United States by potentially delaying sales.
That has sparked worries about short-term supply in China, triggering an unseasonal rally in markets, with physical prices of first grade corn at the port of Jinzhou, Liaoning province, in early September hitting their highest in two months at 1,720 yuan ($260.97) per tonne.
“Farmers won’t rush to sell their grains this year,” said Meng Jinhui, a Beijing-based analyst with Shengda Futures.
Until last year, the government bought farmers’ crops at a minimum price as part of a decade-long stockpiling programme that has now been scrapped.
The move to hold on to crops comes after some farmers last year sold early in the season, missing an opportunity to make more money after prices later rallied.
“This year, I will wait for a couple of months after the harvest and see what prices will do,” said a farmer in Baishan city, Jilin province, who gave his surname as Shan. He will start harvesting his relatively modest 1.3 hectares of corn in two weeks.
Jilin province is the second-largest corn producer in China, with output of around 28 million tonnes last crop year.
In another sign of changes rippling across the industry as the end of the government support programme opens the market up to commercial forces, Shan said he frequently checks corn prices on the internet.
“Prices are not ideal now. I am thinking they will go higher,” he said.
While farmers like Shan have built warehouses that could store corn and help them delay selling, those without might find it more difficult.
A farmer who gave his surname as Feng said he would like to hold out for higher prices, but may have to sell as he harvests because he doesn’t have enough storage.
Concerns over short-term supply come after drought in parts of the corn belt in the summer delayed planting. ($1 = 6.5907 Chinese yuan renminbi) (Reporting by Hallie Gu and Dominique Patton; Editing by Josephine Mason and Joseph Radford)