December 4, 2008
China's corn prices in major producing areas were lower in the week to Wednesday (December 3) as feedmeal demand remained sluggish.
Corn prices in Changchun city in the major producing Jilin province were around RMB1,410 a tonne, down from RMB1,470/tonne a week ago.
Corn prices in Jinan in Shandong province were around RMB1,500/tonne, compared with RMB1,590/ton a week ago.
Traders are treading cautiously, not buying large amounts of corn, while corn processing plants are also not building up stockpiles fearing a gloomy demand outlook, said analysts.
Pork prices have been falling since late April as hog supply has improved, thus hurting farmers' breeding interests.
The government's large cash market corn purchases should have absorbed this year's the higher output, but state warehouses set higher standards for corn quality amid the ample supply, thus slowing down the progress of the purchases, said Tang Shaoming, an analyst at Tianqi Futures.
State Administration of Grain and China Grain Reserves Corp. issued a joint statement to their local branches late Monday to buy additional corn from farmers.
Industry participants said the second phase of purchases would involve 5 million tonnes in four producing regions in the northeast, the same as the first.
However, sluggish demand has damped the effect of the government's supporting policies, said Wang Shiliang, an analyst at Jilin Grains Center.
Meanwhile, as US corn prices are much lower than domestic prices after the tumble in global commodity prices, China's corn has become less competitive in the international market, said analysts.
Corn output this year is estimated to rise 3.7 million tonnes, or 2.4 percent, to 156 million tonnes, according to China National Grain and Oils Information Centre.