October 19, 2006

 

China's corn prices sluggish, harvest pressure surfaces

 

 

China's corn prices dropped in some regions on harvest pressure in the week to Wednesday (Oct 18), analysts said.

 

In northern and central China, corn prices were quoted at RMB1,150-1,200/tonne, around RMB40 lower compared with a week earlier.

 

"Corn prices continued to fall in northern and central provinces, with the new harvest coming to the market. Prices have dropped by over RMB100 since the beginning of October," said Wang Shiliang, a trader at Jilin Grains Centre.

 

In Jilin, China's largest corn-producing province, prices of average quality corn held stable at around RMB1,260 a tonne (US$156.60/tonne), little changed from last week.

 

Prices in Heilongjiang province, another major producing area, were quoted around RMB1,240/tonne, almost the same as last week.

 

"Although prices held firm in the north-east, the trading volume is small as the market expects prices to fall upon the new harvest. Only some large corn processors are buying," Wang added.

 

Jilin and Heilongjiang are located in China's north-east.

 

Meanwhile, corn prices in Guangdong province, one of the largest consumer areas in the South, were quoted at around RMB1,440/tonne, up slightly from last week.

 

"Demand was seen rising moderately in the south. But the stock level remained high, weighing on corn prices," said Wang.

 

Corn prices will fall slightly further with the new harvest expected to arrive in the market in the northeast in November, analysts said.

 

"Corn prices will probably drop to RMB1,220-RMB1,240 in November," Wang said.

 

However, space for spot prices to fall is limited with futures prices holding at a high level.

 

"Farmers will be reluctant to sell, if prices are lower than expected, seeing firm futures prices," Zhang Yifan, a trader at China Grains & Oils Group Feed Corp.

 

"Demand is expected to rise on the international market, also lending strength to domestic prices," he added.