May 31, 2006

 

China corn prices slightly up; farmers see drop in stocks

 

 

Corn prices rose slightly in China in the week to Wednesday (May 31), as falling stocks and rising feed demand prompted more buying from traders and processors.

 

In Jilin, China's largest corn-producing province, the price of average quality corn rose about RMB20 to RMB1,200-RMB1,220 a tonne.

 

Prices in Heilongjiang province, another major producing area in the north-east, were also up RMB10 at RMB1,150-RMB1,160/tonne.

 

Analysts said that with corn stocks in central provinces down to only 10 percent-15 percent of farmers' total stocks earlier, traders and feed producers turned to the north-eastern provinces, leading to an overall increase of prices across the country.

 

"Corn processors (purchasing) for industrial uses in the north-east were active buyers, afraid of a drop in available raw materials for production," said Wang Shiliang, an analyst with Jilin Grains Centre.

 

Meanwhile, prices in major consumption areas in the south were also up with rising feed demand.

 

Prices in Guangdong province rose RMB10 to RMB1,400/tonne from a week ago.

 

"Corn prices are not likely to fall recently, given lower stocks level," Wang said.

 

Ample rains recently in China's north-eastern provinces would lead to another good harvest year, Wang said.

 

It is true that drought had hit the eastern part of Heilongjiang and Jilin provinces, but "this has always been the case in recent years, and the current weather condition is not particularly worse than an average year," he said.