October 26, 2012

Filipino corn traders admit holding on to corn stocks

Amid allegations of corn hoarding in regions that produce the commodity, the Agriculture field office in Cagayan Valley reported that corn traders in the region are holding on to their grain stocks because they are waiting for higher buying prices to offset their expenditure.

The Department of Agriculture Regional Field Office no. 2 reported that during the last week of September up to the first week of October this year, traders bought corn grains at farmgate prices of PHP15 (US$0.363) to PHP15.20 (US$0.368) per kilogram at 14 to 15 percent moisture content.

On the third week of October, however, buyers from Bulacan came to the region with an offer of PHP13.60 (US$0.32) per kilogram.

The traders refuse to sell their corn stock since their price offer is lower than their buying price while the traders are holding their corn grains waiting for a higher price, said DA Region 2 executive director Lucrecio Alviar Jr. in the report.

Industry players earlier said that corn prices are expected to rise because of higher farmgate prices, reluctance of traders to sell at lower prices and high importation costs.

Roderico Bioco, chief operating officer of the Mindanao Grain Processing Co. Inc., noted that imported corn now costs PHP18 (US$0.43) per kilogram, excluding tax, while local farmgate prices are now higher at PHP15 (US$0.36) to PHP16 (US$0.38) per kilo from the previous PHP12 (US$0.29) to PHP13 (US$0.31) per kilo early this year.

Bioco said it is yet to be seen if the forthcoming harvest season in Mindanao, which is expected to be abundant, would bring down prices in Luzon or if prevailing high prices in Luzon would bring up prices in Mindanao.

Pork producers earlier accused corn traders of hoarding stocks, therefore increasing feed prices. They said that while prevailing high prices of corn are not expected to cause increases in pork prices or affect supply ahead of the holiday season, rise in pork prices would be felt by January if feed prices remain high.

Bioco said these speculations may have risen because corn traders are reluctant to let go of their stocks because they would not be able to recover their buying expenses.

Bioco further said the prices that the traders pay farmers now are higher than what they can sell in the market and if they sell now, farmers are going to lose money.

He said some traders are also threatened by large buyers.

The position of traders now is to first gather the volume at whatever cost because there's a competitive pressure now as a result of large buyers like Mindanao Grains in Cagayan Valley, said Bioco, adding that second considerations is how much they can sell later.