China wheat stocks about a year's output -econ planner

* China holding 100 mln T wheat stocks -NDRC

* Grain stocks at 40 pct of annual consumption

* Confident grain prices "basically stable" -official

BEIJING, March 6 - China is holding 100 million tonnes of wheat stocks, around the same amount as its annual output, a top economic planning official said on Sunday, reiterating Beijing's resolve to keep grain prices in check.

In a rare statement of the country's grain stocks, Zhang Ping, head of the National Development & Reform Commission , the country's top economic steering body, said China's grain reserve was about 40 percent of its annual consumption.

That was higher than the 17-18 percent considered a normal level globally, said Zhang. Wheat inventories were also significantly above analysts' estimates, which put stocks at 60 million tonnes. China is the world's biggest wheat producer.

"These figures show we've got abundant grain stocks, which sets a solid foundation for us to keep grain prices basically stable," Zhang told reporters at China's annual parliamentary meeting.

Inflation, to which rising food prices have been the biggest contributors, is one of Beijing's policy priorities this year.

Chen Xiwen, deputy head of the central government's rural work leading panel, said drought in China's major wheat producing areas would have a limited impact on the winter wheat crop, which accounts for only 20 percent of the country's total annual grain output.

China's grain output normally includes wheat, rice, corn and soy.

Chen also said he was confident China's grain prices will be "basically stable" as a result of government measures including boosting production.

China's grain prices rose by less than 20 percent year-on-year since the start of 2011, while global grain prices surged by 100 percent during the same period, he said.

DROUGHT IMPACT LIMITED

Some traders and analysts saw China's drought a sign of a possible weakening in its wheat position, which helped spur U.S. wheat futures <O#W:>.

Chinese officials have repeatedly stressed China's overall grains self-sufficiency and said the country holds abundant wheat stocks.

"The unfavorable factors can be eliminated through efforts," Chen Xiwen told the press.

Rainfall since the Lunar New Year holiday last month has helped relieve most of the wheat-growing areas that had been affected by drought, Chen said.

The country's State Administration of Grain said last week China may still reap another bumper harvest this year despite the a winter drought in main growing areas.

Frank Ning, chairman of the state-owned COFCO Ltd, China's top grain trader, said the government has not decided if it will extend its price cap on cooking oil prices beyond March.

The cap has already hurt crushers who have been unable to pass on the rising import costs of soy.

"I believe the government may offer some policies, either with subsidies or others if it extends the policy. It is hard for companies to bear the cost," Ning told reporters.

Beijing asked companies, including COFCO, not to raise retail prices of vegetable oil for 4 months as part of efforts to cool food price rise. The price cap will expire by the end of March.

(Source: http://asia.news.yahoo.com/rtrs/20110306/tbs-china-drought-grain-21231dd.html)