China corn prices rise slightly; upside limited by stockpile

 

 

Corn prices in major production regions of China were mostly higher in the week to Wednesday, in line with a seasonal hike in feedmeal demand after March.

 

But corn traders worry that government reserves would act as a cap on prices, with upside not expected to surpass RMB1,700 a tonne.

 

In the Harbin area in Heilongjiang province, a major production base in the northeast, corn prices were around RMB1,520/tonne, up from RMB1,510/tonne a week earlier.

 

Prices in Changchun in Jilin province, another producing region in the northeast, were around RMB1,560/tonne, also up RMB10/tonne from a week earlier.

 

An increase in meal demand is driving the small price rise, said Kang Zhichao, an analyst with Nanhua Futures Co.

 

The second quarter traditionally sees feedmeal producers buying corn to replenish stocks.

 

Overseas demand also appears tentatively to be holding up, with March corn exports of 7,777 tonnes well above the 2,670 tonnes exported in February.

 

Corn prices at Guangdong port were around RMB1,700/tonne, flat in the week to Wednesday.

 

"With corn stockpiled to the tune of around 30 million tonnes, domestic supply is sufficient and will be slowly released into the market," said Kang. "We expect prices to stabilize at RMB1,700/tonne, but beyond that, it will be difficult for prices to rise." 
 

Despite the healthy export numbers in March, the large Chinese corn stockpile looms over the global outlook for corn prices.

 

The prospects are further clouded by a recent US Department of Agriculture report that while corn planting acreage is decreasing in the United States, the overall crop yield is expected to be slightly larger this year.

 

"The pressures on corn prices from supply-related factors are still fairly strong," Kang said.