July 14, 2011

Corn prices in China were largely stable in the week to Wednesday (Jul 13), with prices in major producing areas in northeastern China falling slightly, as a decline in CBOT corn damped sentiment in the domestic market.

Prices in Heilongjiang province fell about RMB10 (US$1) from a week earlier to RMB2,050-2,170 (US$315-334)/tonne, but prices in the eastern province of Shandong, where feed mills and processors have a strong presence, rose RMB10 to RMB2,290-2,440 (US$352-375)/tonne.

The average wholesale corn price nationwide as of July 6 was RMB2,320 (US$357)/tonne, unchanged from a week earlier, the National Development and Reform Commission said Tuesday (Jul 12).

Traders are not confident of prices increasing further, and many are cutting inventories to reduce risk, Zhengzhou Grain Wholesale Market said in a research note.

Although China has reportedly bought nearly four million tonnes of corn from US so far this year, the amount is still too small to impact the domestic market, which consumes around 3.5 million tonnes of corn a week, analysts said.

However, the outlook for imports is uncertain as CBOT corn prices are expected to stay bullish in the long term on the back of fundamentals.

China will not continue importing corn if overseas prices are much higher than domestic prices. Local corn prices are already lower than the cost-insurance-freight prices of US corn now, analysts and traders said.

China will harvest new-crop corn around October. Output is expected to increase and pressure prices, which have risen about 20% so far this year.

Corn output this year may rise 2.4% to 181.5 million tonnes, the state-backed China National Grain and Oils Information Centre said in a report.