January 8, 2007

China's Fufeng Group facing margin pressures by rising corn prices
 

Fufeng Group, China's largest glutamic acid producer has been facing margin pressures due to rising corn prices, the "South China Morning Post" reported.

Glutamic acid, which is made from starch, is a key ingredient in food additives such as monosodium glutamate, the report said. Fufeng controls 20 percent of the mainland market for the product.

Chinese corn prices have risen to RMB 1,500 (US$ 200) per tonne, and corn accounts for 50 percent of the company's costs. Company chairman Li Xuechun still feels their products could cover increased production costs. He forecast a "modest" rise in glutamic acid prices, which at present range from RMB 7,000-8000 (US$ 895.5-1023.52) per tonne, the report said.