April 7, 2011

Dwindling stocks hold China's corn prices stable

Corn prices in major producing areas of China were stable in the week to Wednesday (Apr 6), supported by dwindling crops held by farmers and ongoing purchase by the China National Grain Reserves Corp to replenish state reserves.

Some areas witnessed slight declines, as traders are in wait-and-see mode, fearing that the government will introduce tougher measures to combat inflation.

Corn purchase prices in Harbin, Heilongjiang province, were at RMB1,940-1,960 (US$296-299)/tonne, unchanged from a week earlier, while prices in Changchun, Jilin, were RMB2,000-2,020 (US$305-308)/tonne, also flat.

As of March 25, grain enterprises in 10 major producing areas had bought about 71 million tonnes of the corn that was harvested last year from farmers, up sharply from 46 million tonnes at end-February, the State Administration of Grain said last week.

But the state grain stockpiler, also known as Sinograin, has failed to realise its target of buying 10 million tonnes of corn from farmers, as its bid prices were much lower than market prices. The company is waiting for corn prices to decline, according to sources.

China may import 2-3 million tonnes of corn in the 2010-11 marketing year ending August 31, the US Grains Council said Tuesday.

The country's corn imports could hit five million tonnes this calendar year, up from 1-2 million tonnes in 2010, said Jing Ulrich, managing director for Global Markets-China at JP Morgan.