July 22, 2010

China's corn prices edge up on state auctions

Corn prices in China's major producing areas were mostly stable, with some rising slightly in the week to Wednesday (Jul 21) taking cues from price rises at government auctions.

Prices in Changchun in Jilin province were RMB1,810-1,820 (US$267-$268) a tonne, up from RMB1,780-1,800 (US$263-$266)/tonne a week ago, data from the China Grains Network research database showed.

Prices in Jinzhou port in Liaoning province were RMB1,940-1,950 (US$286-$288)/tonne, unchanged from a week ago.

"Bearish factors for corn prices have basically dissipated, while rising government auction prices may influence the spot market's price recovery," China Grains Network said in a research note Wednesday.

Government auction prices in the northeast reached RMB1,830 (US$270)/tonne this week, up from around RMB1,671 (US$246)/tonne last week.

"Corn spot prices are still relatively low, so it's a good time to restock ahead of an expected full-fledged recovery in August and September (as current-year crops dwindle as the marketing year draws to an end), especially since supply of good quality corn remains tight and is getting tighter."

China sold 745,500 tonnes of state reserve corn in the weekly auction Tuesday, accounting for 74.04% of the 1.0069 million tonnes offered for the auction.

The success rate was higher than 60.94% in the last auction, indicating stronger demand for corn amid tight supply.