May 10, 2006

 

China corn prices and feed demand rises
 

 

China's corn prices rose slightly in more active trading, as reduced stockpiles during the week-long holiday and rising feed demand encouraged traders and feed producers to increase purchasing, analysts said Wednesday (May 10).

 

"Small stockpiles have largely been drained during the May Day holiday, and given the easing bird flu situation, people accelerated buying," said Wang Shiliang, an analyst with Jilin Grains Centre.

 

Corn prices in Hebei and Shandong provinces in central China, which are closer to consumption areas compared with major producing regions in the northeast, led the increase.

 

Prices at Zhengzhou in Hebei province were quoted around RMB1,280 a tonne, RMB60 higher than two weeks ago.

 

Farmers' stocks in the two provinces have fallen to a low level, and sellers there were as yet unwilling to sell because of still-rising prices. As a result, buyers turned to the major producing regions in the northeast, which drove prices there higher, said analysts.

 

In Jilin, China's largest corn-producing province, the price of average quality corn rose RMB20 from two weeks earlier to RMB1,170-RMB1,200/tonne.

 

Prices in Guangdong province, a major consumption area in the south, were quoted around RMB1,380/tonne, or about RMB30 higher.

 

"Market participants say the general market sentiment is improving, and they are more confident, thanks to the rising feed demand," said Wang.

 

"Underpinned by farmers' lower stocks and few auctions from local reserves in May, corn prices are likely to rise further in the short term," he said.

 

Meanwhile, more rains during the week-long holiday have accelerated farmers' seeding process in China's northeast, but drought may still be a concern this year, analysts said.