August 18, 2011

China's corn prices rose to a new all-time high in the week to Wednesday (Aug 17), as feed demand was high and supplies stayed tight ahead of the October harvest.

In major cities in the eastern Shandong province, where feed mills and processors have a strong presence, the average price rose about 2% from a week earlier to up to RMB2,500 (US$391)/tonne. In the top hog-producing province of Sichuan, prices rose about 1% to around RMB2,560 (US$400)/tonne.

The nation's average wholesale corn price was RMB2,400 (US$375)/tonne as of August 10, up 0.8% from a week earlier, the National Development and Reform Commission said.

Stocks with traders in northeastern China, the major producer that accounts for about 40% of the nation's production, were only three million tonnes and are falling, analysts said.

Corn prices will likely continue to rise before the harvest in October, but the upside is limited, the Ministry of Agriculture said Tuesday.

The growth in demand from starch and alcohol makers is expected to slow as the government is restricting expansion of the sector to ensure supply to feed mills, it said.

Wholesale pork prices in China rose 0.1% in the week to Sunday, snapping three weeks of flat or lower prices, the Ministry of Commerce said Tuesday.

Meanwhile, the hog-to-corn price ratio, an indicator of returns from hog production, rose last week after three weeks of decline, NDRC data showed, suggesting profit margins for hog raising remain strong.