July 29, 2009
China government corn sales keep prices supported; volume up on week
The Chinese government's corn sales Tuesday (July 28) helped support market prices, with higher volumes compared with last week.
The government sold 928,300 tonnes of corn from its reserves to major producing areas in the north and the northeast, 48 percent of the 1.94 million tonnes it planned to sell. It sold 745,900 tonnes a week ago.
The average price was RMB1,590 (US$232.73)/tonne, lower than RMB1,600 (US$234.19)/tonne last week.
But analysts said the lower price was due to lower quality rather than higher supply.
"The government sales didn't push prices lower. On the contrary they supported the cash prices by setting a floor price," said Wang Cheng, an analyst with Nanhua Futures Co.
The tightening market supply also helped support prices, analysts said, adding the presence of more than 30 million tonnes in reserves means prices are unlikely to rise much either, since the government can increase the sales volume on higher demand.
Cash corn prices in major producing areas in the week to Tuesday were mostly stable, with prices up in some areas.
US$1 = CNY6.83 (July 29)
