July 5, 2007

 

China corn prices stable but regional stocks fell on slow demand

 

 

China's corn prices were mostly stable in the week to Wednesday (July 4), but fell in some regions on ample stocks and a slow recovery in feedmeal demand.

 

In Jilin, China's largest corn-producing province, prices of average-quality corn were quoted around RMB1,400-RMB1,520 a tonne, compared with RMB1,400-RMB1,530 a week earlier.

 

Prices in Heilongjiang province, another major corn-producing region in the northeast, were RMB1,300-RMB1,420/tonne, unchanged from the week before.

 

Average prices in Shandong province were at RMB1,530-RMB1,620/tonne, compared with RMB1,500-RMB1,620/tonne a week earlier.

 

Sluggish demand from China's livestock breeding sector is pressuring feedmeal prices.

 

"It takes (months) for feedmeal demand to recover, and Chinese corn cash prices will likely fall before the September harvest on the prospect of new supply and sluggish demand", said Wang Xiaohui, head of the market-monitoring department of the China National Grains and Oil Information Centre (CNGOIC).

 

The CNGOIC, a government-backed think tank, raised on Monday (July 2) its 2007 corn output forecast to 149 million tonnes from an earlier forecast of 147 million tonnes, as more farmers are switching to planting corn because it offers higher profits.

 

China produced 145.48 million tonnes of corn in 2006.

 

Drought conditions in northeast China have eased on frequent rainfall recently, and corn output will depend on weather conditions in July and August, analysts said.

 

Purchasing volume fell sharply in northeast provinces, and traders are waiting for better prices to cover rising stock costs.