July 21, 2011

 

China's corn prices edge up on US corn strength

 
 

Corn prices in China rose slightly in the week to Wednesday (Jul 20), as a rebound in corn prices in the US last week bolstered domestic market participants' confidence.

 

Prices in northeastern China's provinces of Heilongjiang, Jilin and Liaoning as well as Inner Mongolia Autonomous Region rose about RMB20 (US$3)/tonne, or 1%, from a week earlier to RMB2,060-2,210 (US$319-342)/tonne.

 

The four regions' combined annual output accounts for about 37% of the nation's total.

 

Price in major corn consumption provinces in south China also rose about 1% to around RMB2,450 (US$370)/tonne.

 

The average wholesale corn price nationwide as of July 13 was RMB2,340 (US$362)/tonne, an increase of 0.9% from a week earlier, the National Development and Reform Commission (NDRC) said Tuesday.

 

"We expect corn prices to rise further in August, driven by demand from the animal breeding sector," analysts said.

 

Some feed mills in southern China would rather expand the use of wheat at the expense of corn, reports said.

 

Strong demand from processors pushed corn to a premium over wheat since April, reversing the usual differential relationship between the two grains. Corn prices are trading around 8% higher than wheat in China.

 

Consumption of wheat as animal feed this year will likely reach 12.5 million tonnes, up from 10.5 million tonnes last year, experts said.

 

China's corn harvest will likely set a record this year, with area rising around 2% to 33.3 million hectares, according to data from the NDRC.

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