January 8, 2009

Corn prices in China were stable in the week to Wednesday (January 7), with prices in some areas higher, supported by the government's continued purchase of the crop.

Prices of corn bought from farmers in Harbin city in the major producing province of Heilongjiang were between RMB1,000-RMB1,020 a tonne, stable from a week ago.

Corn prices in Linyi in eastern Shandong province were around RMB1,280/tonne, also unchanged.

Some industrial processing plants raised their bids to attract volume.

Zhaodong processing plant in Jilin province, which is under major trader COFCO Ltd., hiked its price by RMB40 to RMB990/tonne.

The government launched the third phase of its purchase plan late last month to buy another 20 million tonnes of corn to support local prices.

In the previous two phases, the government bought 10 million tonnes of corn from the big harvest last year to shore up local prices amid falling global prices.

But sluggish demand from feedmeal and industrial processing sectors will cap corn prices from rising much, although cash prices have stopped falling, said an analyst at Chicorn Network.

Despite a corn export quota of 500,000 tonnes for 2009 issued late last month, lower global prices make exports almost impossible for now.

"The impact of the corn export quota is very limited," said Shen Wei, a corn manager at COFCO Ltd., but added he is quite confident about export chances later this year amid expectations of a big rebound in freight fees, which are considered too low, which may cause global corn prices to rise.