China's corn prices up on tightening supply

Corn prices in China's major producing areas were higher in the week to Wednesday (May 19) amid tightening supply and delayed planting.

 

The prices were around RMB1,840-RMB1,850 (US$270-US$271) a tonne in Changchun in Jilin province, up from RMB1,800/tonne (US$264) a week ago. Corn prices in several areas of Heilongjiang province were around RMB1,820/tonne (US$267), up RMB50 (US$7.3) from a week ago.

 

Spring planting of corn in the northeast major producing areas was delayed for more than 10 days due to snowfall and low temperatures. As of last Thursday (May 13), farmers in Heilongjiang province had completed planting of 72% of the planned corn areas, the China National Grain and Oils Information Centre said in a note.

 

Earlier this week, the government revised its rules for corn auctions in the northeast, allowing only local feedmill companies and breeders to bid for the crop to prevent traders from hoarding supplies for price speculation.

 

China's Cofco Ltd. bought two more cargoes of US corn overnight and has used up its 500,000-tonne corn import quota, a person familiar with the matter said Wednesday (May 19).

 

The company's latest purchases bring the number of confirmed US corn cargoes imported into China this year to 10 as the country faces tightening local supply.

 

However, the State Administration of Grain's deputy chief, Zeng Liying, said Tuesday (May 18) that China's state corn reserves can easily meet local demand and the government is able to stabilise corn prices, according to the state-run Xinhua news agency.

 

"The government will auction state-reserved corn after selling out the temporarily-reserved crop if there is market demand," Zeng said.

 

Zeng's comments showed not only the government's determination to stabilise prices but also the challenge to tame grain prices amid increasing inflation expectations.

 

The government has been offering corn from temporary reserves in the major north-eastern producing areas since mid-April to meet strong local demand, selling 3.69 million tonnes so far.