July 29, 2010

China corn prices edge down on US imports

China's corn prices in major producing areas fell slightly in the week to Wednesday (Jul 28) amid thin trade, as many corn processors have stopped buying and corn imports from the US added to supplies.

The removal of a 5% export tax rebate on cornstarch and ethanol, effective July 15, has also begun to exert some downward pressure on prices, though the extent is limited because the Chinese corn market is mainly focused on domestic demand, analysts said.

Prices in Changchun, Jilin province, were around RMB1,790-CNY1,800 (US$264-$266)/tonne, down from RMB1,810-1,820 (US$267-$269)/tonne a week ago, data from the China Grains Network research database showed Wednesday.

Prices in Siping, also in Jilin, were around RMB1,840 (US$271/tonne), unchanged from a week ago.

Trading houses have lost enthusiasm for purchases of domestic corn, contributing to the small decline in prices nationally, it said.

"But with government reserve volumes declining, corn's fundamental supply remains tight, which supports prices in the longer term," it said.

Ultimately, the price direction will depend on this year's domestic corn area and harvest conditions, with current indications suggesting largely stable output compared with last year, it said.