November 05, 2003

 

 

China Corn Market Rally Stalls On Increased Supplies To Consumers

 

The sizzling rally in China's corn markets stalled this week, after increased movement of corn supplies from the top-producing northeastern region, Chinese traders said Wednesday.

 

This resulted after pressure from the central government to allocate more railcars to ensure grain movement to major consuming regions, traders said.

 

So far this week, the domestic markets have been quiet as buyers remain sidelined while waiting for lower prices before increasing forward coverage.

 

Prices were generally unchanged from Friday, in contrast with the sharp rally last week.

 

The rally had pushed corn prices in eastern and southern China to 1,400- 1,450 yuan ($1=CNY8.28) a metric ton Oct. 31, from CNY1,150-CNY1,200/ton Oct. 24, traders said.

 

However, prices in Dalian, Liaoning province, are now around CNY1,200/ton, the same level as Friday, but about CNY120/ton higher than prices 10 days ago.

 

"Over the weekend, corn movement from northeastern China to major consuming regions was increased after railway authorities increased railcars for grain transportation, to alleviate the regional shortage," said a trader from China National Cereals, Oils & Foodstuffs Import & Export Corp., or Cofco.

 

Local traders in northeastern China also confirmed that railcars for grain transportation were substantially increased over the weekend.

 

"Each day, an additional 1,170 railcars were allocated in Heilongjiang for the transportation of grains, including corn, to other provinces. The situation is similar in Jilin - about 900 railcars were added to move the corn to other provinces," a local grain trader in Harbin said.

 

The recent improved weather in northern China also facilitated farm sales of newly harvested corn, added the traders.

 

In the coming week, Chinese corn markets are likely to fall on pressure from increased supplies, said traders.

 

"The corn markets rose too fast and too much, and a correction is due to come soon, perhaps this week," said the trader from Cofco.