November 24, 2003

 

 

China Corn Market Near-Term Outlook Still Supportive

 

The Chinese corn market is expected to consolidate around the current levels this week unless there are major changes in the international market, traders said Monday.

 

The near-term outlook, however, is still supportive as supply could tighten in the coming months because of a general shortage of rail wagons to transport corn to major consuming regions in Southern China during the approaching holidays.

 

"During the New Year's holiday and the Spring Festival, railcar availability will usually get very tight and transportation costs will turn higher," a trader from Chinese National Cereals Oils and Foodstuff Import & Export Corp said Monday.

 

The market is correcting a little bit now, but that may be temporary as the prospects are still friendly, other traders said.

 

Corn prices were flat to lower last week, with increased supplies and lower demand from the livestock industry weighing on sentiment in most consuming regions, local traders in China said.

 

But prices in major producing regions remained stable, they said.

 

Early Monday, corn prices in southern China were around 1,260 yuan to 1,320 yuan ($1=CNY8.2646) a metric ton, CNY 40/ton to CNY60/ton lower than prices a week ago, because of the recent arrival of several corn shipments at the ports in Guangdong.

 

"The corn markets in Guangdong fell because the supply situation has improved, but demand from the local feedstuff producers is lackluster," a trader in Shenzhen, southern China said Monday.

 

After the recent rally of livestock prices, many producers in China have sold some of their pigs and poultry, leading to lower demand for feedstuff, traders in China said.

 

In northeastern China, where most of the corn is produced, prices were mostly unchanged last week, with producers reluctant to lower their offers in the hope of better demand in the weeks ahead.

 

Old corn prices offered by local warehouses in Jilin province, the top corn producing region in China, were around CNY1,040/ton to 1,060/ton, unchanged from prices a week ago.

 

The robust export pace in the second half of 2003 also provided support to the corn market, as exporters are trying to ship as much corn as possible under the current financial support regime amid talks of lower financial support in 2004.

 

In October, China exported 1.53 million tons of corn, up 21% from exports in the same month last year, according to official customs estimates. In the first ten months of 2003, China exported 12.25 million tons, up 46% from exports in the first ten months of 2002.