May 8, 2008

 

China corn prices up on rising reserve costs

 

 

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

 

Rising global grain prices also supported the forecast of higher domestic prices which prompted farmers to hold on to their stock.

 

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

 

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

 

Some industrial processing plants hiked the purchase prices to attract volumes, as the government arranged for 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 houses 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 as feedmeal demand picked up.

 

Corn purchase prices in Yucheng in Shandong province were at RMB1,610 to RMB1,670 per tonne, up RMB10 to 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 go up on pressure from high global prices, rising production costs and reduced planting acreage.