February 7, 2007

China corn prices slightly lower amid increased supply, thin demand
 

China's corn prices in major producing regions were slightly lower in the week to Wednesday, as supply increased while demand thinned.

In Jilin, China's largest corn-producing province, the prices of average quality corn were quoted at RMB1,050-1,140/tonne, RMB10-20/tonne lower than RMB1,070-1,150/tonne a week earlier.

Prices in Heilongjiang province, another major corn producing region in the north-east, were about RMB1,040/tonne, down from RMB1,050-1,060/tonne in the previous week.

"Corn processing plants face tight cashflow because they had purchased too much earlier," said Wang Shiliang, a trader at Jilin Grains Centre.

The fall in demand coincided with a rise in supply, as farmers are keen to release their stocks ahead of the commencement of spring ploughing at end-March, he added.

Farmers still have about 40 percent of the harvest on hand, and most are based in north-eastern Jilin and Heilongjiang provinces.

Average prices in Shandong province were largely stable at RMB1,500-1,570/tonne, compared with RMB1,500-1,560/tonne a week earlier.

Prices may fall further after the Spring Festival (Chinese New Year) in mid-February, as export commitments will be filled by then, and alcohol processing plants are likely to reduce purchases due to losses caused by severe competition, analysts said.

Warmer weather will also make it more difficult to stockpile corn without damaging the grain, they said.