September 30, 2010

China's corn market steady amid new crop arrival

China's corn prices in major producing areas stayed largely stable in the two weeks to Wednesday (Sep 29), as arrivals of the first batches of newly harvested corn offset pre-holiday supply tightness in consumption areas.

Prices in Harbin, in Heilongjiang province, were around RMB1,860-1,880 (US$278-$281) a tonne, mostly unchanged from two weeks earlier.

Prices in Changchun, in Jilin province, were around RMB1,840-1,860 (US$275-$278)/tonne, also largely flat from two weeks ago.

Trading last week was halted for three days because of the Mid-Autumn Festival holidays.

Before the festival, prices in some high-consumption areas like Ningbo in Zhejiang province had risen about RMB20 (US$3) from the previous week, but they have since settled back at par with production areas, analysts said.

Harvesting of the new corn crop is still under way, but small volumes have already begun to reach the market.

The new supply has buffered the impact of holiday-related demand pressures on prices, as has a continued regimen of state auctions.

A state auction Tuesday sold 37% of offered volumes, up slightly from 35% sold a week earlier, when demand had noticeably picked up.

With demand expected to hold steady or rise slightly as colder weather sets in, state auctions, large imports and the new harvest will become increasingly important in holding down volatile prices.

Reversing a longstanding trend, China became a net corn importer in June this year, as weather-related shortages cut heavily into last year's harvest.