December 5, 2007

 

China corn prices little changed; government sales stabilize prices
 

 

Corn prices in China were little changed in the week to Wednesday (December 5, 2007), capped in part by an expected rise in supplies due to planned sales from state reserves.

 

In Jilin, China's largest corn-producing province, prices of average quality corn were quoted around US$257 a tonne, little changed from last week.

 

"The expectation of rising supplies helped tame prices, and in some places, prices fell slightly," said Wang Shiliang, a trader at Jilin Grains Center.

 

The National Development and Reform Commission said late Tuesday the first batch of corn from state reserves will be sold next Tuesday to "ensure supply and stabilize prices".

 

Though it didn't specify the amount, the China National Grain & Oils Information Center, a state-backed agency, said last week the country will sell at least 2 million tonnes of corn from state reserves.

 

Corn prices in China rose to record highs this year, which helped drive the country's consumer price index to an 11-year high.

 

"I don't think the sales will seriously damp cash values. Demand is fairly strong, and the floor prices set by the government are close to market prices, which means it intends to ensure supply," Wang said.

 

Chinese demand for feedmeals is high at year-end and usually begins to fall one month ahead of Chinese New Year, as hogs are slaughtered.

 

Corn is mainly used to produce animal feed in China.

 

CNGOIC said in its Wednesday report that total corn production this year will reach 148 million tonnes, unchanged from its forecast issued last month.