January 22, 2009

Corn prices in major production regions of China were largely unchanged in the week to Wednesday (January 21), as plentiful supply and government stockpiling balanced the market.

In the Harbin area of Heilongjiang province, a major production base in the northeast, corn prices were around RMB1,340 a tonne, unchanged from a week earlier.

Prices in Changchun, Jilin province, another producing region in the northeast, were also mostly steady at RMB1,370/tonne.

Prices in both regions have ratcheted up RMB20/ton from a month ago as government stockpiling gets into full swing, said Wang Cheng of Nanhua Futures Co.

The government has pressed forward with plans to stockpile 30 million tonnes of corn at RMB1,500/tonne, aiming to prop up prices, evidently with some success.

But with the reserve program scheduled to end in April, market participants are concerned that prices will come under pressure again amid plentiful corn supplies, unless demand recovers.

Much lower global corn prices continue to pressure Chinese prices and exports.

China's corn exports fell 9 percent on year in December, and though this was a sharp narrowing from the 81 percent decline in November on year, worries remain that rising Chinese corn production will cloud the crop's outlook.