December 21, 2006

 

China's corn prices little changed; likely to remain high

 

 

China's corn prices in major producing regions remained little changed in the week to Wednesday, after the futures market lost steam for further gains and market participation began to cool on news of auctions of corn stocks, analysts said.

 

In Jilin, China's largest corn producing province, prices of average quality corn were little changed around RMB1,360-1,380 a tonne.

 

Prices in Harbin city, provincial capital of Heilongjiang province, were stable at RMB1,360/tonne.

 

"Buyers began to cool down this week, as the wait-and-see sentiment dominated the futures market," said a market analyst in Beijing.

 

"Corn processors in the north-east were not eager to raise their bids, afraid of short of supply, following market talk of the government's plan to sell more corn from the reserves," he said.

 

However, analysts said the current prices are still well underpinned, and aren't likely to fall much in the coming weeks on strong demand, as even more auctions will be held.

 

Market participants said corn prices are likely to remain high before the Spring Festival, which falls in late February this year, thanks to a pre-festival rise in animal feed demand.

 

Meanwhile, in Guangdong province, one of the largest consuming areas in the south, prices rose RMB50 to around RMB1,700/tonne, due to short of arrivals.

 

"The cold weather in the north-east added difficulty to transporting the corn down to the south this week," said a trader.

 

However, "we expect more arrivals in the next few days, which will cap the prices".