January 20, 2011

China corn prices stay flat as traders exit market

Corn prices were mostly unchanged in the major producing areas of China amid slow trade over the week to Wednesday (Jan 19), as most traders in northeastern China have exited the market after the government said it would impose order on the grain market.

Prices in Jiamusi, Heilongjiang province, were around RMB1,820-RMB1,840 (US$276-US$279) per tonne, unchanged from a week earlier.

Prices in Tongliao, Inner Mongolia Autonomous Region, were about RMB1,910-RMB1,930 (US$290-US$293) per tonne, also unchanged.

The National Development and Reform Commission has sent an inspection team to north-eastern China's Jilin province to investigate excessive stockpiling of corn at some companies, after Premier Wen Jiabao said on Tuesday (Jan 18) that the market needed rectifying.

Most corn buyers have suspended purchases in north-eastern provinces of Heilongjiang, Jilin and Liaoning, according to sources.

Analysts said the move was to sweep away competitors for the government grain stockpiler China Grain Reserves Corp, or Sinograin will soon resume corn stockpile purchases.

Sinograin and some central state-owned enterprises are the only active buyers in north-eastern China.

A lack of buyers in the domestic corn market will further damp corn prices in the near future, and farmers have begun to sell in the face of a market that has turned against their expectations, analysts said.

China imported 1.57 million tonnes of corn in 2010, around 18-fold compared with 2009, according to customs data.

"We don't expect China to import huge amounts of corn in 2011, due to high global prices and stable domestic supply," analysts said, adding that private companies will likely import about two million tonnes of corn in 2011.