November 8, 2006

 

China corn prices mostly up, in step with rising demand

 

 

Corn prices in China mostly increased in the week to Wednesday, in step with rising demand, analysts said.

 

In northern and central China, corn prices were quoted at RMB1,170-RMB1,240 a  tonne, RMB20-RMB40 higher than a week earlier.

 

"Feed companies and corn processors were seen increasing their demand for corn noticeably this week, especially in the northern provinces such as Shandong," said an analyst at the China National Grains & Oils Information Center in Beijing, a major government-backed think tank.

 

However, in Jilin, China's largest corn-producing province, prices of average quality corn were quoted around RMB1,200 a tonne, little changed from last week.

 

The average price in Heilongjiang province, another major producing area, was also flat at RMB1,200/tonne.

 

Demand is recovering as livestock farmers have increased production so as to meet demand expected to rise later this year and early next year," said Wang Shiliang, a trader at Jilin Grain Centre.

 

Meanwhile, corn prices in Guangdong province, one of the largest consuming areas in the south, were quoted around RMB1,500/tonne, up RMB70 from last week.

 

"With animal diseases, such as bird flu under control, demand in the southern provinces has started to rise steadily as well," Wang said.

 

"Feed and corn processing companies in the south have rushed to the northern provinces in order to acquire cheaper corn," the CNGOIC analyst added.

 

This year's corn prices are higher than a year earlier, amid strong global demand, analysts said.

 

"Corn prices rose by an average of RMB150/tonne compared with last November," Wang said.

 

Corn prices are expected to rise over the next couple of weeks, thanks to the bullish market sentiment.

 

"Grain trading companies, seeing demand rising both home and abroad, will probably increase their purchases this year," Wang said.

 

"Stocks of corn from old crops have been diminishing at a pretty fast pace lately, due to robust industrial demand. So state warehouse will also need to buy more corn in order to keep a safe reserve level," he added.