May 5, 2008

Companies in Jilin, short on corn, raises purchasing prices

Subsidies by the central government to encourage Jilin province to export corn to other provinces have become so successful that deep-processing companies in the province are having trouble finding supplies within the corn-growing province itself.

Some corn deep-processing companies in Jilin Province, in northeastern China, raised purchasing prices by RMB 20 to RMB 30 a tonne on April 28, mainly due to falling corn supply here.

In response, corn futures contract 0809 grew RMB 35 a tonne or 1.97 percent to RMB 1,815 a tonne on the Dalian Commodity Exchange, one of the four futures exchanges in the nation.

Turnover reached as much as 1.288 million lots, a record in the recent period.

The increase was likely to have come after China granted subsidies to some companies in northeastern China, encouraging them to export grains to other provinces across the nation.

This has led to a drop in grain supply in the region so local companies had to raise purchasing prices.

A government official revealed that Jilin's grain export to other provinces had grown 14.6 percent by April 18 over a year earlier, the biggest growth in the last three years. Grain export of Heilongjiang Province in northeast China rose 12.6 percent.