September 6, 2007

China corn prices mostly stable; demand strong in some areas

Corn prices in China were mostly stable in the week to Wednesday (September 5), but prices in some regions rose on improving 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.

In Heilongjiang province, another major corn-producing region in the northeast, prices were at RMB1,300 to RMB1,400 a tonne, compared with RMB1,350 to RMB1,420/tonne.

Average prices in Shandong province were at RMB1,560 to RMB1,730 a tonne, up from RMB1,540 to RMB1,700 a tonne a week before.

Improving feedmeal demand, delayed sales by state corn reserve houses and concerns of an output cut due to drought helped push corn prices higher in central China, said analysts.

Poultry feedmeal output increased by 20 to 30 percent in July from a year earlier, while pig feedmeal output rose by around 14 percent, according to sample survey conducted by the China Feed Industry Association.

There was some early-ripe corn entering the market at high prices, helping support old corn prices.

But corn prices are unlikely to rise much as new corn will enter the market in mid-September in larger amounts in central China, easing the supply pressure, said information provider China Corn Network.

Rumours that state reserve houses in northeast China will sell 3 million tonnes of old corn later this month to make room for new corn will also help to curb price rises, it said.