July 11, 2007

 

China corn prices steady; To fall amid ample supply, slow demand
 

 

Corn prices in China were mostly steady in the week to Wednesday (Jul 11) on a small pickup in feedmeal demand, but analysts expect prices to fall in the short term amid overall sluggish demand and ample supply.

 

In Jilin, China's largest corn-producing province, prices of average-quality corn were quoted about RMB1,400-1,520/tonne, unchanged from a week earlier.

 

Prices in Heilongjiang province, another major corn-producing region in the north-east, were at RMB1,300-1,420/tonne, stable from the week before.

 

Average prices in Shandong province were at RMB1,540-1,620/tonne compared with RMB1,530-1,620/tonne a week earlier.

 

Feedmeal demand for poultry has picked up somewhat, while feedmeal demand for pigs remains sluggish amid concerns over disease outbreaks in some areas of China, said grain information provider alibaba.com.

 

Analysts do not expect feedmeal demand for pigs to pick up until the fourth quarter of this year.

 

Despite the sluggish demand, traders have purchased corn in large amounts due to expectations that the crop's supply will be tight later this year amid rising industrial demand. As a result, supply could be ample later on, said Wang Xiaohui, head of the China National Grain and Oils Information Centre's market monitoring department.

 

With corn futures on the Dalian Commodity Exchange and Chicago Board of Trade falling, traders are worried corn prices may fall before the harvest season starts in September, so they are selling at a faster pace.

 

But any fall in corn prices could be limited on high storage costs, said CNGOIC in its weekly note.

 

The fall would not exceed RMB60/tonne, according to alibaba.com.