July 21, 2003


China Corn Market Weekly Report: Slight Dip in Corn Prices Week Ending July 18


An eFeedLink Exclusive Report

For the week ending 18 July, corn prices in China registered a slight decline, a result of the sale of old grains and the continual fall in the U.S. corn prices. As of 18 July, the prices of medium grade corn across China were as follows:


Ex-warehouse prices in Heilongjiang ranged between RMB940/ton-960/ton. Most regions saw a fall of RMB20/ton from the previous week, while prices in the central regions remained unchanged from the previous week.


Ex-warehouse prices in Jilin province ranged between RMB970/ton-980/ton, a fall of RMB10/ton from the week before. Ex-warehouse prices in Liaoning were RMB1010/ton, while Dalian port registered RMB1050/ton, a fall of RMB10/ton on average from the week before.


Delivered-to-factory prices in Hebei province remained unchanged from the previous week at RMB1050-1060/ton. Delivered-to-factory prices in Henan and Shandong provinces fell by RMB20/ton from the previous week to RMB1040-1060/ton and RMB1060/ton respectively.


In Jiangsu province, delivered-to-factory prices fell by RMB10/ton from the previous week to RMB1110/ton. 


Rail station prices in Shanghai, Zhejiang and Jiangxi provinces fell by RMB10/ton from the previous week to RMB1090/ton. In Hunan and Hubei provinces, rail station prices were RMB1130/ton, a fall of RMB10/ton from the week before. Similarly, rail station prices in central Sichuan province fell by RMB10/ton to RMB1140/ton.


Delivery prices in Guangdong province were RMB1140/ton, unchanged or RMB10/ton less from the previous week. In South Guangxi and Fujian provinces, rail station prices in South Guangxi province and delivery prices in Fujian province ranged between RMB1150/ton-1160/ton, unchanged or RMB10/ton less from the previous week.

At the corn auction held in Heilongjiang province on 16 July, 1.14 million tons of corn were snapped up; the lowest price at the starting bid of RMB840/ton and the highest price hitting RMB980/ton, part of the transaction price exceeding the market price. The second half of 2003 will see expedited clearance of old grain stocks.


The month of August is expected to see the clearance of nearly 1.5 million tons of old grains across China. Specifically, 60,000 tons of old grains will be auctioned in Beijing in July.


In August, Jilin province is expected to clear 1.1 million to 1.2 million tons of old grains, while Hebei province is expected to clear 250,000 to 300,000 tons of old grains.


Of late, due to corn demand peaking in Guangdong province, average monthly corn consumption in Guangdong is expected to exceed 500,000 tons. As such, corn producers are sending huge quantities of corn to Guangdong.


The current corn stockpiles of some feed enterprises can last between ten days to two weeks. Given that port prices for corn have fallen to cost price, and the demand for corn currently at its peak, factories generally have yet to decide reducing the procurement quantities.


Hence, with domestic demand for corn hitting its peak soon, corn prices are not likely to fall much.


In terms of exports, export quotations for China's corn have lately remained stable. FOB quotations for August and September are confined to US$110/ton, while delivered-to-port prices in East Asia hover between US$117-118/ton.


Export quotations for U.S. corn have dipped significantly recently. In the incoming months of August and September, delivered-to-port prices for U.S. corn are US$126/ton compared to East Asia.


The narrowing of the price gap between China and U.S. corn raises the competitiveness of U.S. corn in the East Asian market, posing a threat to the domestic corn exports.

With the ideal climatic conditions for corn crops in central western U.S. showing no signs of abating according to weather reports, CBOT continues the previous week's trend of falling. Recent contracts have dipped within two months from U.S.$2.50/bushel to U.S$2.06, showing no signs of stabilizing yet.


All in all, due to the increasing frequency of old grains auctions and falling global prices, corn prices are likely to continue falling in the short term, though not to a great extent. With rising domestic demand, reduced corn stockpiles and a tight corn supply prior to the new quarter, a price increase is possible.