August 4, 2011

 

 

Corn prices in China in the week to Wednesday (Aug 3) rose to a fresh high due to low stocks with farmers and traders, along with strong demand in major consumption areas.

 

In Zouping in the eastern Shandong province, where feed mills and processors have a strong presence, prices rose RMB30 (US$4.66), or about 1.3%, to RMB2,440 (US$379)/tonne.

 

In the northeastern provinces of Heilongjiang, Jilin and Liaoning, as well as Inner Mongolia Autonomous Region, prices rose around RMB20 (US$3.10) to RMB2,090-2,240 (US$324-348)/tonne. The combined annual output of these regions accounts for about 37% of the nation's total.

 

Corn prices have risen more than 20% so far this year.

 

Buyers said they are finding it difficult to procure fresh supply as farmers have almost no stocks left. At the same time, traders are still bullish on corn prices and are reluctant to sell out their inventories before the harvest in October.

 

"With tight supply, corn prices will stay firm," the Zhengzhou Grain Wholesale Market said in a research note.

 

However, corn's upside is limited as output is expected to rise to a record high this year and supply tightness will be relieved when new-crop corn hits the market in October, it said.

 

Corn acreage totalled nearly 33.3 million hectares in 2011, an increase of 2% from a year earlier, the National Development and Reform Commission said last month.

 

Rainfall will be below normal in August in China's northeastern agriculture belt, the main corn-producing area, threatening another round of drought, the Ministry of Agriculture said.

 

Sufficient water is critical for the ongoing corn pollination period, the ministry said. The crucial growing season for corn is the July-August period.