January 14, 2010

China corn prices higher amid active trading

Corn prices in China's major producing areas were higher in the week to Wednesday (Jan 13) as traders were actively buying due to tight supply in northern ports.

Prices in Changchun in Jilin province were between RMB1,600-RMB1,620/ tonne (US$234-US$237), up RMB40 (US$5.86) from a week earlier.

In Harbin in Heilongjiang province, prices were between RMB900-RMB1,200/ tonne (US$132-US$176), up slightly from a week ago.

Traders competed for the crop as supply was tight in northern ports, while farmers were reluctant to sell. Heavy snowfall in the northeast blocked transportation, and inventories at ports fell as a result. Expectations for corn prices to rise further became stronger amid an overall rise in food prices caused by the heavy snowfall.

Farmers will be more willing to sell ahead of the Chinese New Year in mid February, while demand from processing plants is likely to remain bullish, according to the China National Grain and Oils Information Centre.

Nonetheless, as farmers have a large amount of stocks on hand, prices are unlikely to rise much, said analysts.

Farmers in big producer Heilongjiang sold less than 30% of the volume they were expected to sell by the end of 2009, down 15 percentage points from the same period in 2008, according to data from the China Grain Network.