June 25, 2009

China's corn prices were mostly stable in major producing areas of the northeast in the week to Wednesday (June 24), and higher in medium-production areas.

Corn prices in Heilongjiang province were between RMB1,500 to RMB1,560 a tonne, mostly stable from a week earlier.

Corn prices in Shandong province were RMB1,660 to RMB1,740/tonne, higher than RMB1,600-RMB1,660/ton a week ago.

Dwindling supply and tightening stocks, with no confirmation of government corn sales, helped to support local prices, analysts said.

Trading volume was light as farmers were busy with the wheat harvest and as a result there were less corn available on the market.

Expectations of higher grain prices also boosted corn prices.

The government said earlier this week it will scrap export taxes on wheat, rice and soybean from July 1 to help exports, as domestic demand is sluggish.

Analysts said the move was more of a gesture to signal support for prices, rather than having the potential to concretely affect the market.

Corn prices are likely to go higher in the near term as supply continues to fall while feedmeal demand from the poultry sector recovers somewhat in southern consumption areas, China Grain Network said in a note.