May 22, 2007

China Agri-Industries: Corn prices up 15 percent; Eyes asset buys
 

China Agri-Industries Holdings Ltd., a Chinese crop processor and bio-fuel producer, Tuesday said corn purchasing prices so far this year have risen 15 percent on-year, which would impact the company's operations in the short term.

However, rising corn prices would not have a huge impact on China Agri's operations in the long term, China Agri-Industries Executive Director Yu Xubo told reporters after the company's annual general meeting.

China's annual corn output is expected to total 143 million tonnes in 2006, while its ethanol output of 1 million tonnes required 3.3 million tonnes of corn, or less than 2.5 percent of the nation's total output, Yu said.

Corn-based ethanol is primarily used for blending with gasoline to reduce harmful emissions. China has been promoting the wider use of bio-fuel as it aims to cut pollution before the Beijing Olympics in 2008.

Separately, China Agri said it still plans to buy Dongguan Zhong Gu Oils & Fats Co. by the end of this year from its parent company. Dongguan Zhong Gu has a soybean processing capacity of 600,000 tonnes a year and soybean oil refining capacity of 300,000 tonnes a year. Its operations include oil extraction, soybean meal production and sale and storage of edible oils.

China Agri is also eyeing buying China Resources (Jilin) Bio-Chemical Co. before the end of this year upon completion of the share reform of the Shanghai-listed company, which engages in corn processing and biochemical operations, Yu said.

China Agri, also China's largest rice exporter in terms of volume, said it plans to increase its rice export to Japan, South Korea and the Middle East, where products could be sold at higher margins.