February 26, 2009

Corn prices in China were higher in the week to Wednesday (February 25), supported by continued government buying in northeast producing areas.

 

Corn prices in Changchun in Jilin province, a major producing area, were around RMB1,440 a tonne, up RMB40 to RMB50/tonne from a week earlier.

 

Corn prices in Jinan in big producing province of Shandong were between RMB1,320 and RMB1,380/tonne, up RMB40 to RMB50 from a week ago.

 

Corn prices in Shekou port in Guangdong province, a major consumption area, were between RMB1,580 and RMB1,590/tonne, up RMB20/tonne.

 

The government said last week it will buy another 10 million tonnes of corn from its northeast producing areas, reflecting the government's determination to stabilize local prices.

 

The amount comes in addition to an earlier plan to purchase 30 million tonnes.

 

Analysts also said the government is likely to buy 2 million tonnes of corn from producing areas in the east to protect farmers' interests there.

 

The purchase price will be RMB1,540/tonne, higher than the current prices of RMB1,340 to RMB1,500/tonne in the region, two industry sources said.

 

Farmers in the eastern producing areas stayed on the sidelines amid expectations that the government's possible purchases may help to raise corn prices further.

 

Actual demand from feedmeal companies remained weak, with stocks at Shekou port at more than 300,000 tonnes, unchanged from a week earlier, said an analyst with China Corn Network.

 

However, she expected corn prices to continue to be supported by the government's purchases in the near term.

 

"The growth rate in corn prices in (east producing areas) has slowed down...(and) overall weak demand will cap corn prices in the long run," China National Grain and Oils Information Centre said in a note.

                               

US$1 = RMB6.83 (Feb 26)