China corn prices up; feedmeal rises ahead of holidays

Corn prices in China major producing areas rose slightly in the week to Wednesday (September 16), underpinned by higher feedmeal demand ahead of approaching holidays, drought concerns and transport delays.

Corn prices in Shandong province, a key producer, were around RMB1,880 (US$275.23) to RMB2,000 (US$292.80) a tonne, up RMB20/tonne from a week earlier, said Ding Ling of Shanghai JC Intelligence Co. In Jilin province, they were at the government-mandated level of around RMB1,550/tonne, as markets were out of stock.

"Supply is fairly tight, and to some extent there more demand coming because of the National Day holiday," Ding said.

Most buyers are fulfilling their requirements from state stockpiles and not from the market because purchases from the government entitle them to a subsidy of RMB150/tonne, analysts said. With new corn due to be harvested around October, old supplies are dwindling, and the fresh crop is due to reach the market around December.

Prices are also higher because of a recurring problem around this time of year, when clogged cargo availability in rail transport delays the auctioned corn from reaching markets, Ding said.

Global analysts maintain a bullish overall outlook for grains.

There is "very limited downside for corn...prices from current lows, especially as we enter the fourth quarter and an economic recovery fuels demand," Barclays Capital said in a note Tuesday.

US$1 = RMB6.83 (Sep 16)