January 11, 2006

China corn prices higher on strong demand from state companies
 

Corn prices in China rose slightly in the week to Wednesday, boosted by strong demand from state-owned enterprises who are keen to stockpile corn before the Lunar New Year.

Farmers were hoarding stocks on expectations that corn prices would rise further on continued strong demand by these enterprises before the national holiday starting end-January, and this also underpinned prices, said Wang Shiliang, an analyst with Jilin Grains Center.

In Jilin, China's biggest corn-producing province, prices of average quality new corn that have lost some moisture ranged from RMB1,120/tonne to RMB1,150/tonne, increasing by around RMB20 from the previous week.

Prices in Heilongjiang province, another large corn-producing region, were about RMB20/tonne lower than in Jilin, but were up about RMB10/tonne from the previous week.

In Shandong province, prices remained steady at around RMB1,100/tonne.

Corn is mainly used as feed in China. Although demand for feed has risen, Wang questioned the rise in corn prices.

In major corn-consuming areas like Guangdong province in southern China, corn prices have not increased as much, compared with those in the country's corn-producing areas in the northeast, he said.

Prices in Guangdong remained stable at RMB1,310-RMB1,320/tonne in the week to Wednesday.

However, corn prices in both production and consumption areas could see a correction in coming days due to rising transport costs. Millions of people are expected to travel via rail during the Lunar New Year, and this will limit available space for goods, Wang added.