February 18, 2004

 

 

China's Corn Markets Showing Signs Of Recovery

 

Chinese corn markets showed signs of having shaken off the ill effects of the bird flu crisis closing firmer in the past week, traders in China said on Tuesday.

 

With concerns about deadly the bird flu virus subsiding, buyers now are returning. The possible resumption of corn exports in March also helped the market players to regain confidence.

 

As of Tuesday, the price of normal quality corn in Guangdong, southern China, was quoted around 1,390 yuan ($1=CNY8.277) a metric ton, compared with CNY1,360-1,380/ton one week ago. This is still much lower than the prices of CNY1,470/ton one month ago.

 

In the top corn-exporting port of Dalian, Liaoning province, prices were quoted around CNY1,180/ton, also gaining CNY10/ton compared with a week ago.

 

Exporters are still shipping corn from the Dalian port, but at a much slower pace, said traders. But it is increasingly likely that China's corn exports could gain momentum in the coming month, as market talk said Beijing has already set corn export quota for the first half of 2004. There has been no confirmation of the market talk.

 

The soaring freight costs and firm Chicago Board of Trade corn prices have led to expectations that China's corn export offers could remain competitive for its traditional buyers like South Korea and Japan.

 

Demand from the local poultry industry improved this week, after China's government announced measures to support the shaky industry struggling with bird flu.

 

Exporters of poultry products will get a full rebate of the value added tax in the period between Feb. 1 and July 31, 2004, according a weekend report from the official Xinhua News Agency.

 

Among other measures, local poultry processors can waive income taxes, Xinhua said.

 

Chinese poultry producers have significantly increased replacements of chickens and ducks this week, traders said.

 

The corn markets are likely to continue to recover in the coming week, traders said, as fears about bird flu recede and signs of more demand from local end users and exporters are expected to surface soon.