August 23, 2007

China corn prices stable; reserve sell may add pressure

Corn prices in China were mostly stable in the week to Wednesday (August 22), supported by an output reduction forecast, but analysts said prices are under pressure due to the sale of corn reserves and sluggish feedmeal demand.

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

Prices in Heilongjiang province, another major corn-producing region in the northeast, were at RMB1,300 to RMB1,400 a tonne, also stable from a week ago.

Average prices in Shandong province were at RMB1,540 to RMB1,650 a tonne, compared with RMB1,540 to RMB1,620 a tonne a week before.

Corn output from the major producing regions in northeast China may decline by 5.2 million tonnes due to the drought, said Jilin Grain Wholesale Market.

The low prices at corn reserves auction in Jilin province last week also indicates sluggish demand, said analysts.

Later this year, major corn-producing regions need to sell 4 million to 5 million tonnes of state corn reserves, adding pressure to prices, analysts added.

Low levels of corn stocks in Shandong province and rising transportation fees have helped to support prices there, said China National Grain and Oils Information Centre.