May 15, 2008

 

Corn prices weaken in China after massive quake

 

 

Corn futures prices fell in China's Dalian exchange on expected weak demand for the feed ingredient after the worst earthquake hit the country's largest hog producing province of Sichuan.

 

China's Dalian corn futures contracts fell for the second day on Wednesday.

 

The city of Mianyang, a centre for pig breeding, was reported to be badly hit. The longer-term impact of the quake on small-scale farmers and pig breeders in Mianyang and in Ziyang, southeast of Chengdu, is still unknown.

 

Zhao Yufei, a dealer with China North Futures Co. Ltd., said that the major breeding areas are close to the epicenter.

 

Yet the impact should be short term after transport resumes, Zhao added.

 

As major railway lines have been congested with military rescuers, the transport of other commodities, including corn, was halted, traders said.

 

The trunk line from the province to Baoji in the northeast was suspended after a tunnel collapsed.

 

Two bridges on the rail line were also damaged, and it is uncertain when services will resume.

 

Zhao pointed out that some of their clients have stopped shipping corn from the northeast.

 

Sichuan produces about 10 percent of China's pork and consumes more than 8 million tonnes of corn a year, the majority sourced from provinces in the northeast.

 

An industry official added that one of the things China worries about is possible outbreaks of swine disease after the quake.

 

Breeders may stop breeding more pigs after the quake, which would reduce supplies in future, the official said.

 

The Ministry of Agriculture said this week it would send teams with disinfectant to Sichuan to help prevent outbreaks.

 

The earthquake damaged some grains warehouses around Sichuan's capital, Chengdu, but state reserves are safe, Sinograin, which administers the nation's state reserves, said Wednesday.