China's corn prices up on hog market recovery

Corn prices in China's major producing areas were higher in the week to Wednesday (Apr 28) as feedmeal demand increased due to a recovery in the hog market.

Corn prices in Jiamusi in Heilongjiang province were at RMB1,720-RMB1,740 (US$252-US$255) a tonne compared with RMB1,680-RMB1,720 (US$246-US$252) a week ago. Prices in Baicheng in Jilin province were RMB40/tonne (US$5.9) higher at RMB1,780/tonne (US$261).

The average hog price monitored by the Ministry of Commerce had risen for two straight weeks as of April 25, after the government started purchasing frozen pork from the market to prevent a further fall in prices.

The recovery in hog prices has boosted farmers' interest in breeding, boosting demand for feedmeal, said analysts. Hog prices are likely to rise further, said the ministry.

With the government's corn purchases in major producing areas nearing an end, southern feedmeal enterprises and state-owned companies have begun purchasing more of the crop, while the corn in the northeast cannot meet market demand, said the China National Grain and Oils Information Centre in a note, adding that as a result, companies were seeking more corn at the government's weekly auctions, boosting the trading volume.

However, the government's corn reserves in the northeast are less than 10 million tonnes, and if the weekly auctions continue, this corn will be sold out within three months, said CNGOIC.

Tuesday (Apr 27), the government sold 789,199 tonnes of corn in the northeast major producing areas, nearly all of the volume it offered to sell. The corn was sold at prices ranging between RMB1,530-RMB1,850/tonne (US$224-US$271) compared with auction base prices between RMB1,520-RMB1,640/tonne (US$223-US$240).

It also sold 332,900 tonnes of corn in the southern consumption areas, or 57% of the volume it offered to sell.