October 21, 2010

China corn prices edge higher on firm demand

China's corn prices in major producing areas climbed slightly in the week to Wednesday (Oct 20), helped by strong sales and rising futures prices in the domestic market.

Prices in Zhanjiang, in Guangdong province, were around RMB2,140-2,150 (US$321-$323) a tonne, up from RMB2,120 (US$318)/tonne from a week ago.

Prices in Jining, in Shandong province, were around RMB1,920 (US$288)/tonne, up from RMB1,860 (US$279)/tonne from a week earlier.

Demand remains strong in the physical market in spite of supply pressure from the harvest of new corn crop that started in late September, as end-users hold the view that demand is going to pick up in the next few months.

"Farmers are pretty happy about current price levels and corn consumers are just willing to buy now given the current environment of rising global commodities prices," said Xu Wenjie, an analyst with Tianma Futures.

Severe weather forced farmers to cut corn production last year, and that has offset supply pressure from this year's good harvest, Xu said.

Meanwhile, a government auction sold 21.6% of the 995,000 tonnes of corn reserves offered at a regular auction Tuesday, down from a week earlier when the government sold 36% of a similar volume because corn from the new fall harvest is arriving in the market.