China corn prices mixed; likely state sales weigh on prices

 

 

Corn prices in China's major producing areas were mixed in the week to Wednesday (June 10), as the market waited for the government to sell part of its reserves.

 

Corn prices in major producing Jilin province were between RMB1,470 to RMB1,490 a tonne, down from RMB1,500 to RMB1,550/tonne a week earlier.

 

Corn prices in Heilongjiang province were between RMB1,360 to RMB1,380/tonne compared with RMB1,340 to RMB1,370/tonne a week ago.

 

Corn prices in Ji'nan in Shandong province were around RMB1,630/tonne, up RMB50/tonne.

 

Dwindling corn supply in the northeast producing areas and processing plants' low level of stocks helped support prices in some areas.

 

This year, the government bought 35 million tonnes of corn, less than one-fourth of last year's harvest of 165.5 million tonnes, at RMB1,500/tonne.

 

Most alcohol plants in northeast Heilongjiang province have suspended operations due to corn scarcity, said Jiang Daxing, deputy manager of COFCO Ltd.'s local biofuel branch.

 

But news that the government is likely to sell 15 million tonnes of corn from its reserves in the market soon weighed on prices this week.

 

The government may sell the corn to processors, mainly in the northeast, at RMB1,500/tonne and subsidize them by RMB100/tonne, a person familiar with the matter said Monday.

 

Analysts expect corn prices to continue consolidating in a narrow range in the near term with the government's supporting policies.