China corn prices rise on drought concerns; auction volumes up

China corn prices in major producing areas were higher in the week to Wednesday (September 2) on rising concerns over a decline in output due to the ongoing drought.

 

Corn prices in Harbin in the northeastern major producing province of Heilongjiang were around RMB1,580 (US$231.11) a tonne, up from RMB1,550 (US$226.90)/tonne a week ago.

 

Prices in Changchun in the northeastern province of Jilin were around RMB1,610/ton, compared with RMB1,540-RMB1,600/ton a week earlier.

 

The drought in the northeast could cause an output decline of around 15 million tonnes, tightening supply this year, although the government reserves of 30 million tonnes may curb any price surge, said an analyst with a state-owned grain trader who had just returned from a field trip to the major producing Jilin and Liaoning provinces.

 

China corn output last year was estimated at 165.9 million tonnes, up 8.9 percent on year, according to data from China National Grain and Oils Information Centre.

 

Drought concerns pushed local corn prices to levels higher than the prices at the government weekly auctions, boosting sales volumes to the highest levels since such auctions kicked off July 21.

 

The government sold 1.92 million tonnes of corn during its weekly auctions Tuesday, 77 percent of the 2.5 million tonnes it planned to sell.

 

 

Feedmeal demand usually picks up ahead of the coming National Day holiday and the mid-autumn festival in October as plants replenish stocks.

 

Corn prices are likely to stay high although the harvest season is nearing, as the government regular sales at high prices have set the tone for new corn prices, said analysts.

 

U$1 = RMB6.83 (September 2)