October 31, 2007

 

China corn prices stable; downward pressure ahead of harvest

 

 

China's corn prices were mostly stable in the week to Wednesday, but prices in some regions were higher on tight supply.

 

Ex-factory corn prices in Changchun city in Jilin province, a major corn-producing region, were around RMB1,450 a tonne, unchanged from a week ago.

 

Ex-factory corn prices in Harbin city in Heilongjiang province, another major corn-producing region, were around RMB1,370-RMB1,380/tonne, stable from a week earlier.

 

However, factories' purchase prices in Shandong province were around RMB1,660-RMB1,710/tonne, up from RMB1,610-RMB1,640/tonne in the previous week.

 

Industrial processing plants in Shandong increased their purchasing prices due to dwindling stocks and bad weather in the region, traders said.

 

Increased feedmeal consumption in non-corn producing regions also helped support corn prices.

 

Feedmeal sales volume, especially that of poultry feedmeal, in some provinces including Guangdong and Shandong provinces, were up 10 percent - 30 percent from the same time last month, according to Feedmeal for

 

Livestocks Information Network.

 

But traders said corn prices in northeastern China's major producing regions face downward pressure due to ample old corn stocks.

 

Despite a severe drought and insect infestation in major corn producing regions, some analysts said total corn output this year may not fall from last year.

 

Feng Lichen, the manager of Chicorn Network, a corn consultancy Web site, expects corn output to total 147 million tonnes in 2007, slightly higher from 145 million tonnes in 2006.

 

With a large amount of new corn scheduled to arrive on the market from mid-November, prices are likely to be lower, as traders may slow their purchasing process this year due to ample stocks, he said.

 

However rising transportation fees and limited stocks at non-producing regions will help support corn prices in those areas, analysts said.