August 2, 2007

 

China corn prices stable; traders reluctant to sell at loss

 

 

Corn prices in China were mostly stable in the week to Wednesday (August 1) in light trade, as traders were reluctant to sell at a loss amid weak demand.

 

In Jilin, China's largest corn-producing province, prices of average-quality corn were quoted around RMB1,370 to RMB1,500 a tonne, stable from a week earlier.

 

Prices in Heilongjiang province, another major corn-producing region in the Northeast, were at RMB1,300 to RMB1,400/tonne, compared with RMB1,300 to RMB1,420/tonne the week before.

 

Average prices in Shandong province were at RMB1,540 to RMB1,620/tonne, unchanged from a week earlier.

 

Corn purchasers were not buying in large amounts in expectation of lower prices as traders release their ample stocks, said the China National Grain and Oils Information Centre in its weekly report.

 

Despite the ongoing drought in northeast China's major corn producing regions, sluggish feedmeal demand, which is unlikely to pick up until next year due to a domestic shortage of pigs, continues to weigh on the market.

 

"The drought doesn't have a fundamental impact on the corn prices as the acreage increased anyway," said Ma Mingwang, an analyst at Tianqi Futures in Heilongjiang province.

 

He said corn acreage in his province increased by 17.5 percent from a year earlier.

 

Meanwhile, most corn processing plants have enough stocks to satisfy their current production needs before the harvest in September.

 

Analysts expected corn prices to stay under pressure in the coming weeks as state reserve houses will likely increase sales of stock from previous crops in August to prepare for the new harvest starting from September.