August 2, 2006

China corn prices stable, wheat replacing corn for feed

China's corn prices were unchanged in the week to Wednesday (Aug 2), while an increasing number of feed companies have begun to replace corn with wheat as the main raw material to produce feed for livestock, an analyst said.

In Jilin, China's largest corn-producing province, prices of average quality corn were quoted around RMB1,220-RMB1,270 a tonne, the same as the previous week.

Prices in Heilongjiang province, another major producing area in the north-east, were also unchanged around RMB1,220-RMB1,230/tonne.

Corn prices are still holding at a high level despite (price) declines in recent weeks. Some cost-sensitive feed producers increasingly switch to wheat, which is cheaper than corn in northern provinces, such as Hebei, Shandong and Henan, said Wang Shiliang, an analyst at Jilin Grains Centre.

Buying by local corn processors remained thin as they still had a lot of stocks, Wang added.

Meanwhile, corn prices in Guangdong province, one of the largest consumption areas in the South, were unchanged at around RMB1,410-RMB1,420/tonne.

"Deliveries to Guangdong Province continued to fall as prices in Guangdong showed no sign of pickup," he said. "Corn prices are expected to remain flat on the whole in next week, with small fluctuations in some regions."

Prices will probably remain stable due to largely balanced supply and demand in corn-producing provinces such as Jilin. Prices will drop slightly in areas such as the coastal Liaoning Province in China's north-east, where demand for corn is sliding mainly because of decreased shipments to southern China, Wang said.