December 14, 2006

 

China corn prices higher on processors' active buying

 

 

Corn prices in China's major producing regions rose in the week to Wednesday (Dec 13), as processors looking to build up their inventories raised their bid prices.

 

In Jilin, China's largest corn producing province, prices of average quality corn were quoted around RMB1,360-1,380 a tonne, up RMB40 from the previous week.

 

Prices in Harbin city, the provincial capital of Heilongjiang province, were quoted around RMB1,360/tonne, up RMB40 from a week earlier.

 

"Some corn processors raised their prices (bids) late last week to build up inventories, afraid of insufficient supply early next year," said a market analyst in Beijing.

 

"Prices are well underpinned at the moment, although uncertainties, including government policies on exports, are keeping the outlook for the next six months quite unclear," said the analyst.

 

Market participants said the weather in China's north-eastern region is sufficiently cold for storage of newly harvested corn without drying, and thus was another reason prompting more buying by traders and end users in the past week.

 

Meanwhile, in Guangdong province, one of the largest consuming areas in the south, prices were quoted at RMB1,630-1,650/tonne, little changed from a week earlier.

 

With the approach of various festivals, feed demand in the south is likely to rise, but the high prices may result in greater use of soymeal in animal feed production, which may have an impact on corn prices, said Wang Shiliang, a trader at Jilin Grain Centre.

 

Corn is still mainly used to produce animal feed, while its use in the production of industrial goods is quickly picking up.

 

"If we see a correction in (corn) futures, which is likely given the gains recently, the spot market will fall accordingly," said Zhang Yifan, a futures trader at China Grains & Oils Group Feed Corp.