China will further encourage the use of corn to make ethanol this year amid efforts to reduce its huge grain stocks, as authorities mull adjustments to the floor prices for wheat and rice this year.

Xu Shaoshi, head of the National Development and Reform Commission, told an annual work conference on grain circulation recently that the top economic planner will allow a moderate increase in corn-based ethanol and expand its use in other areas to help absorb the corn stocks.

"Instead of subsidizing the storage facilities, it is better to use the grain to subsidize processing enterprises, which will also alleviate the pressure on warehousing," he said.