December 12, 2007

 

China corn prices mostly stable, likely to consolidate in short term

 

 

China's corn prices were mostly stable in the week to Wednesday (December 12, 2007), but prices in some regions were lower, with more supplies entering the market.

 

Ex-factory prices of old corn in Changchun city, Jilin province, a major corn producing region, were between RMB1,460-RMB1,470 a  tonne, unchanged from a week ago.

 

Purchase prices of new corn in Shenyang city, Liaoning province, were around RMB1,340/tonne, also unchanged from a week earlier.

 

Prices of corn arriving at Shekou port in Guangdong province were at RMB1,840/tonne, down RMB140 from the week before.

 

There is an increasing volume of corn entering the market amid the harvest season, with more buyers making purchases in anticipation of higher prices due to overall inflation and rising demand.

 

Rising corn-based starch prices also helped support corn prices. Starch prices were RMB30-RMB140/tonne higher than a week ago, according to data from the Chinese Grain Network, which provides grain-related information.

 

China sold 238,100 tonnes of corn in some non-producing regions from its state reserves Tuesday, or 48 percent of the 500,000 tonnes it planned to sell.

 

The prices ranged from RMB1,760 to RMB1,850/tonne and were reasonable compared with cash prices.

 

Shen Wei, a manager at COFCO Maize Co., said the auction won't have much impact on corn prices because of the small amount, and any downside room in corn prices is limited, as the government needs to fill its corn reserves once corn prices are lower.

 

Other analysts said farmers will be reluctant to sell if corn prices fall further, as food prices in general have been rising.

 

China's consumer price index in November rose 6.9 percent from the same month last year, driven by an 18.2 percent rise in food prices, the National Bureau of Statistics said Tuesday.

 

Growth in the key inflation gauge, at an 11-year high, compared with 6.5 percent growth recorded in October.

 

Corn prices are likely to consolidate at current high levels in the near term due to increasing demand from the feedmeal sector ahead of the year-end holidays and rising prices in the downstream sector, said Jiangsu Grain Wholesale Market.

 

RMB1= US$0.1356 (Dec. 12)