October 25, 2007

 

China's corn prices may fall later this year

 

 

China's corn prices may fall later this year on sufficient supply and the government's tightening monetary policies, according to the Jiangsu Grain Network.

 

Analysts noted that China's central bank has raised interest rates five times this year to cool lending and investment growth and contain inflation.

 

If so, this may mean that farmers who are holding to new corn with expectations of prices rising further may be disappointed.

 

Higher interests rates are likely to discourage traders from buying corn and storing it for speculation, said analysts.

 

As feedmeal sector demand has declined recently, industrial processing plants would be the major corn purchasers in the near term, said analysts.

 

Meanwhile, China's corn prices were mostly stable in the week to Wednesday, but prices in some regions were lower amid ample stocks and weaker demand.

 

Corn prices in Jilin province, a major corn-producing region, were RMB 1,400-RMB 1,460 a tonne, compared with RMB 1,400-RMB 1,500/tonne a week ago.

 

Corn prices in Heilongjiang province, another major corn-producing region, were RMB 1,300-RMB 1,390/tonne, stable from a week earlier.

 

Corn prices in Shandong province were RMB 1,510-RMB 1,580/tonne, compared with RMB 1,500-RMB 1,580/tonne in the previous week.

 

Trading has been muted as traders waited for more guidance on corn prices amid ample stocks during the ongoing harvest.

 

Unlike past years, China is not likely to issue new quotas for low-tariff corn exports during the harvest this year.