March 19, 2008

 

China corn outlook positive on recovering demand
 

 

Corn prices in China were mixed in the week to Wednesday (March 19, 2008 ), but analysts are still optimistic about the price outlook, given lower inventories and recovering demand .

 

Prices in the major production regions in the northeast rose slightly from a week earlier on dwindling farmers' stocks, but fell slightly in the consumption regions in the south with increased supplies arriving.

 

Corn prices in Jilin province, China's largest corn-producing province, were quoted at RMB1,400 a tonne, RMB20-RMB30 higher than a week earlier.

 

"Prices are likely to continue the uptrend in the production regions in the northeast, given the dwindling stocks, and the expectation of smaller acreage," said Jimmy Liu, an analyst at Shanghai JCI Intelligence Co.

 

State media reported Tuesday that corn area is likely to decline, as a result of higher soybean prices that encouraged farmers to grow more soy.

 

Corn area will likely fall 13.3 percent on year to 3.5 million hectares in Heilongjiang province and grow by 0.2 percent on year to 2.86 million hectares in Jilin province, the official Liaoning Daily said, citing the latest survey results from the National Bureau of Statistics.

 

While prices in central China's production regions were little changed, in Guangdong province, a major consumption region in the south, prices declined slightly on increasing arrivals and persisting sluggish demand.

 

Prices were quoted around RMB1,750/tonne, RMB20 lower than a week earlier.

 

"I'm not worried about the demand side. As the number of piglets in feedlots is recovering steadily, demand (for corn) will grow accordingly," a trader said.

 

(US$1=RMB7.07)