July 7, 2011


China's corn prices stabilise as trader speculation wanes


Corn prices in China's major producing areas were stable in the week to Wednesday (Jul 6), as a sharp decline in international prices shook the confidence of domestic traders and prevented corn prices from rising further after five consecutive months of gains.


Prices in Heilongjiang, the top corn-growing province, were flat from a week earlier at RMB2,060-2,180 (US$318-337)/tonne, while prices in the eastern province of Shandong, where feed mills and processors have a heavy presence, were also unchanged at RMB2,280-2,430 (US$352-376)/tonne.


The average wholesale corn price nationwide as of June 29 was RMB2,320 (US$359)/tonne, unchanged from a week earlier, the National Development and Reform Commission, the state's top economic planner, said Tuesday.


"We expect corn prices in producing areas to maintain the current level in the near term," Zhengzhou Grain Wholesale Market said in a research note.


However, prices in major ports will come under pressure, due to the arrivals of imported corn from the US and the recent slump in international corn prices, it said.


China sold 120,440 tonnes of corn, or 45% of the volume it offered from state reserves in an auction Tuesday, the National Grain and Oil Trade Centre said. The ratio of sales to offer volumes was the highest this year, indicating strong demand for below-market-price state corn reserves as breeders expand hog production amid record high pork prices.


China offered 266,028 tonnes of corn in the Wednesday auction, down sharply from around 420,000 tonnes a week earlier. It was offering around 1.8 million tonnes each week early this year, but reduced offer volumes to about 600,000 tonnes per week from April due to dwindling stocks.


Strong demand from processors and feed mills has driven corn prices 20% higher so far this year, and the government's weekly sales have done little to cap the price gains, as only some feedmills and animal breeders are qualified to participate.

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