February 15, 2006

 

China corn prices higher in major consumption areas
 

 

Corn prices in major producing regions of China were flat but climbed higher in major consumption areas in the week to Wednesday, compared with the week ended Jan 27.

 

Although processors have begun resuming operations, trading in the country's north-eastern regions has not returned to pre-holiday levels as farmers celebrated the Lunar New Year holidays until the end of last week.

 

In Jilin, China's north-eastern corn-producing base, prices of average quality corn with little moisture were unchanged around RMB1,120 to RMB 1,150 a tonne.

 

The price range was similar to that in Heilongjiang province, another major corn producing region in China.

 

As Jilin Grains Centre will auction 1.25 million tonnes of old corn from local reserves Feb 23 to Feb 24, local traders are trying to obtain lower purchasing prices while farmers are still reluctant to sell, hoping for higher prices when post-holiday feed demand picks up. "We are not worried much about pressure from the auction on prices, given the high futures prices," said Wang Shiliang, an analyst with Jilin Grains Centre.

 

However, prices in China's southern Guangdong province, a major consumption region, picked up quickly in the week as processors were eager to build up their inventories after the holidays. However, arrivals failed to meet demand.

 

Prices in Guangdong rose RMB40 a tonne to RMB1,400 a tonne.

 

In Dalian, a major gateway in Liaoning province for grains produced in north-eastern China, corn prices rose RMB10 a tonne to RMB1,260 a tonne.

 

"We think prices are more likely to rise than fall in the short run, if the futures prices remain steady," Wang said.

 

Meanwhile, the rise of local corn prices since mid-January has narrowed exporters' profits, with exports slowing down significantly since then, traders said.