February 21, 2008

 

China corn prices mostly stable amid lingering holiday mood

 

 

Corn prices in China were mostly stable in the week to Wednesday, as trading had yet to return to normal following the Lunar New Year holiday.

 

Trading usually recovers after the Lantern Festival, which this year falls on Thursday of this week.

 

Corn prices in Heilongjiang province were between RMB1,020-RMB1,380 a tonne, unchanged from levels during the Lunar New Year holiday.

 

In Hebei province, corn prices were between RMB1,620 (US$227) to RMB1,720 (US$240) a tonne, also stable from prices during the holiday period.

 

Corn prices in Linyi, Shandong province, were around RMB1,840 (US$257) a tonne.

 

However, heavy snowstorms in southern, central and eastern China have blocked transportation of corn from northern producing regions to the south, pushing up prices in some regions.

 

The latest data from the National Grain and Oil Trade Center shows China sold 140,737 tonnes of corn from state reserves Tuesday, or 28.1 percent of the 500,051 tonnes it had planned to sell.

 

The average price was RMB1,764 (US$264) a tonne, it said, up from RMB 1,752 (US$245) a tonne during the last auction before the Lunar New Year holiday.

 

Including this sale, the government has sold 752,167 tons of corn from its state reserves since December, or 16.7 percent of its planned sale of 4.5 million tonness aimed at stabilizing domestic feedmeal prices.

 

Analysts expect corn prices to fall with the start of spring planting, as rising temperatures will make it difficult for farmers to store corn, and they are likely to sell it actively.

 

Meanwhile, feedmeal demand will likely be capped, as the snowstorms killed many pigs and prolonged the recovery period for pig breeding, said the China Food Industry Network.

 

Yet corn prices are likely to pick up over the longer run as farmers' stocks dwindle, said the NGOTC.