Chinese grain harvest posted its eighth consecutive increase this year but it will still fail to stabilize prices as supplies continue to struggle to meet growing demand.

China's Ministry of Agriculture, at a news briefing on Thursday in Beijing, said estimates of China's total grain output of corn, rice and other grains this year is pegged at more than 550 million metric tons, a 2.9 percent hike over the previous year.

Subsidy programs earlier placed by government assuring farmers they would be able to sell their grains contributed to the mark up In harvest output, said Chen Xiaohua, deputy director of the ministry.

Favorable weather conditions, despite a severe drought in the southwest, also contributed to the rise in production.

However, the rise in crop output will not likely lower its market prices, as Xiaohua said moderate price hikes for grains could still expected due to higher farm costs, growing meat consumption which drives demand for feed grain, and international market forces.

Benchmark Price

The price of rice from Thailand, now the benchmark in Asia, rose 1.3 percent, close to the highest level since December 2009, as the government's plan to start grain purchases next month boosted domestic prices, according to the Thai Rice Exporters Association, Bloomberg News reported.

The report indicated that the price of 100 percent grade-B white rice climbed to $627 a metric ton, from $619 a ton on Sept. 21, said Pisanu Sangyoo, an official at the association. The price rose to $629 a ton on Sept. 7, the highest level since December 2009.

The price of 25 percent broken rice increased to $559 a ton, from $554 a week earlier, he said. The exporters' association holds a meeting every week to set prices, Bloomberg added.