China corn prices up on government buying; farmers reluctant to sell

 

 

Corn prices in China's major producing areas were higher in the week to Wednesday (March 11), supported by the government buying.

 

Prices of corn leaving factories in the major producing province of Jilin province were between RMB1,500 and RMB1,520 a tonne, up RMB20/tonne from a week ago.

 

Corn prices in Weifang in Shandong province were around RMB1,530/tonne, up RMB30.

 

Farmers in northeastern producing areas were reluctant to sell their corn due to expectations of further price increases with support from the government's purchases, said analysts.

 

Farmers in the northeast are still holding 35 percent to 40 percent of the corn they harvested in 2008, and trading volume in the area will likely remain low as the government hasn't completed its planned purchases yet, so it will be competing with traders and processing plants for the crop, China Grain Network said in a note.

 

 

He said the Chinese government won't increase grain purchases from last year's harvest above the planned level as farmers have almost completed their grain sales.

 

Since the 2008 harvest in October, China has offered to buy a total of 40 million tonnes of corn at RMB1,500/tonne.

 

Analysts expect that corn prices will continue to be supported by government buying in the near term, but prices in some areas could be under some downward pressure.

 

Increased stocks and sluggish demand may start to push prices lower at the port of Shekou in Guangdong province, a big consumption area, an analyst with China Corn Network said.

 

Corn prices at the port were between RMB1,630 and RMB1,640/tonne, up RMB10 from a week ago.