October 26, 2006

 

China's corn prices stable amid moderate demand recovery

 

 

China's corn prices were stable in the week to Wednesday (Oct 25) while demand recovered in some regions.

 

In northern and central China, corn prices were quoted at RMB1,150-1,200 a tonne, little changed compared with a week earlier.

 

"Demand for feed picked up moderately in the northern and central provinces, supporting corn prices," said Wang Shiliang, a trader at Jilin Grains Centre.

 

However, "the recovery is not strong enough to bring about a rebound in prices," said Zhang Yifan, a trader at China Grains & Oil Group Feed Corp.

 

In Jilin, China's largest corn-producing province, prices of average quality corn were stable around RMB1,260/tonne.

 

The average price in Heilongjiang province, another major producing area, was little changed at RMB1,220/tonne.

 

"Only large corn processing companies made large purchases in the north-east lately," 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 around RMB1,430/tonne, little changed from last week.

 

Corn prices were higher compared with the same period last year, according to analysts.

 

"This year's prices are roughly RMB100/tonne higher than last October," Wang said.

 

Corn prices are expected to fall when the crop enters the market on a large scale in mid-November, but room for further losses is limited as potential demand should be high, analysts said.

 

"The new harvest will increase supplies. At the same time, demand is expected to rise as well when large buyers such as state warehouses and grain trading firms start to acquire corn in producing regions," added Wang.

 

Rising prices on the international market will also help bolster domestic prices.

 

"Corn exports are profitable even at the current price level. More exports will ease pressure on prices on the domestic market," Zhang said.

 

Prices of Chinese corn bound for South Korea were quoted around US$165/tonne, on a free-on-board basis, at northern Chinese ports, according to local traders.