August 12, 2010

China corn prices stable amid light trade

Corn prices in major producing areas in China were unchanged in the week to Wednesday (Aug 11), as many food processors stayed on the sidelines, preferring to draw down ample inventories.

Heavy rain has threatened some corn-producing areas, raising the risk of crop failures and underpinning prices.

Prices in Changchun in Jilin province were around RMB1,790-1,800 (US$264-$265)/tonne, flat from a week ago, data from the China Grains Network research database showed.

Prices in Lishu, also in Jilin, were around RMB1,780-1,820 (US$262-$268)/tonne, unchanged from a week ago, as sales were low.

Traders have been reluctant to sell, holding out for higher prices expected in the weeks ahead as August and September are peak consumption months for food and feedmeal due to public holidays.

Government reserve houses are also likely to buy a large volume of the crop in late autumn to refill dwindling stocks.

Arrivals of US imports have eased supply tightness.

Prices are also weighed by expectations of a sizeable corn crop this year.

Overall domestic corn acreage and current harvest conditions still indicate a largely stable output compared to last year, analysts said.

The National Grain and Oil Information Centre, a state-backed think tank, has not changed its estimate that corn output this year could reach 168 million tonnes, up 2.5% on-year.