May 8, 2008

  

China corn prices up on tighter supply 

 

 

Corn prices in China's major producing regions were higher in the week to Wednesday on rising reserve costs and expected tighter supply.

 

Rising global grain prices also supported the notion of higher prices ahead, enforcing farmers' reluctance to sell as a result.

 

Corn purchase prices by industrial processing plants in Heilongjiang province were RMB1,340-RMB 1,430 a tonne, up RMB20-RMB120 from a week ago.

 

Dwindling corn stocks in the hands of farmers, now around 15 percent-20 percent of the last year's harvest volume, helped push up prices, said Xu Weiping, an analyst at Ministry of Agriculture.

 

Some industrial processing plants have hiked their purchase prices to attract volumes, as the government arranged more vehicles to help in the transportation of corn from the northern producing regions to consumption areas in the south to meet local demand.

 

Meanwhile, state reserve companies in the northeast regions continued to buy corn from the market to support prices.

 

Corn prices in the central and southern consumption areas were also higher along with a rise in the producing regions, as feedmeal demand picked up.

 

Corn purchase prices in Yucheng in Shandong province were at RMB1610-RMB1,670/tonne, up RMB10-RMB20 from a week ago.

 

China sold 38,540 tonnes of corn from the state reserve Tuesday, or 12.2 percent of the 314,840 tonnes it planned to sell.

 

Analysts said corn prices are likely to continue rising due to pressure from high global prices, rising production costs and reduced planting acreage.