January 13, 2011

 

China's corn prices stable amid flat trade

 

Corn prices in major producing areas of China were largely unchanged in sluggish trade over the week to Wednesday (Jan 12), but they rose slightly in some areas as some feed millers began to buy in anticipation of government purchases.

 

Prices in Harbin, Heilongjiang province, were around RMB1,860 (US$282)/tonne, unchanged from a week earlier.

 

Prices in Tongliao, Inner Mongolia Autonomous Region, were about RMB1,910-1,930 (US$290-$293)/tonne, up about RMB20 (US$3)/tonne from a week earlier.

 

Stated-owned China Grain Reserve Corp, which operates China's government grain reserve system, has yet to start buying corn from farmers to replenish stockpiles depleted by sales of 23.69 million tonnes of corn in 2010.

 

As the government's purchases are bound to send corn prices higher, some animal feed companies have raised their corn-stockpile targets ahead of the Lunar New Year to reduce price fluctuation risks, analysts said.

 

However, farmers are still very reluctant to sell their inventories, underpinning corn prices. "They are waiting for higher prices as they have no lack of money at present," experts added.

 

China is unlikely to import very large amounts of corn in 2011 due to high global prices and concerns about genetically modified corn, anlysts said, adding that imported corn prices have been higher than those of domestic products.

 

China's corn reserves stood at a record low of about seven million tonnes as of September 30, compared with about 40 million tonnes in 2009, a futures company said in a report late last year.

 

It expected the country to import between five and eight million tonnes of corn in the 2010-11 crop year to September.

 

China imported 1.56 million tonnes in January-November 2010, compared with a negligible amount in 2009.

 

Corn output last year was about 172.5 million tonnes, up 5% from 2009, the state-backed China National Grain and Oil Information Centre said in a regular estimate Wednesday. The forecast was unchanged from December.

 

Corn futures on the Dalian Commodities Exchange rose about 25% last year.