August 4, 2003

 

 

China Corn Market Weekly Report - Various Regions Exhibit Slight Fluctuations In Corn Prices

 

An eFeedLink Exclusive Report

Overall corn prices for the week ending August 1 remained relatively stable- albeit a slight fall in prices in some regions- a result of the rebound in domestic corn supply and the auction of old grains. At the end of the week, the prices of medium grade corn in China were as follows:

  • Ex-warehouse prices in Heilongjiang and the Jilin regions remained unchanged from the week before, at RMB920-960/ton and RMB980-990/ton respectively. Prices in the Liaoning region and Dalian port were RMB1020/ton and RMB1060/ton respectively, unchanged from the previous week; 
  • Delivered-to-factory prices in the Hebei region fell RMB10/ton from the previous week to RMB1050/ton. Delivered-to-factory prices in the Henan region remained unchanged from the previous week, at RMB1060/ton. Similarly in the Shandong region, delivered-to-factory prices kept to the previous week's range of RMB1060-1080;
  • In the Jiangsu region, delivered-to-factory prices rose RMB10/ton from the previous week to RMB1110/ton. Rail station prices in the Shanghai region and central Zhejiang averaged RMB1090/ton, a fall of RMB10/ton from the week before;  
  • Rail station prices in the Jiangxi, and Hunan and Hubei regions remained at RMB1100/ton and RMB1140/ton, unchanged from the previous week. In central Sichuan, rail station prices fell RMB10/ton to RMB1160/ton; 
  • Delivery prices in the Guangdong region remained unchanged from the previous week, at RMB1140/ton. Rail station prices in Southern Guangxi and delivery prices in the Fujian region ranged between RMB1140-1170/ton, a fall of RMB0-10/ton from the week before. 

With better corn harvests following the end of the drought season in China's corn producing regions, market analysts expected China's corn production for the new quarter to hit 116 to 117 million tons, or even 118 million tons. CNGOIC has also raised its projection of corn production from 114 million tons in June to 116 million tons. The increase in corn production also prompted market analysts to prematurely raise the corn exports for 2003 to 13 million tons, higher than the previous year's figure of 11.67 million tons.

 

However, due to the rise in domestic corn production and corresponding increase in corn exports, and the new low in CBOT corn prices in over a year following the widespread market projection of record breaking corn production volume by the U.S. for the new quarter, it is predicted that China corn exports will face even stiffer competition for the second half of the year, leading to falling export prices.

 

However, according to some weather reports, the average daily temperatures lately in the northeast chief producing provinces have fallen below the temperatures recorded for the same period in the previous years, which may delay the growth of new corn, to the detriment of corn production. In all, the severe droughts and threat of floods in the northeast producing regions cast a shadow of uncertainty over corn production and quality.

 

With the SARS situation already behind, the auction of domestic old grains resumed. Besides the recent auction of old grains in Heilongjiang, another auction will be held in the Jilin province in mid August. This time round, corn continues to dominate the auction. It is forecast that the current shortfall in feed ingredients such as corn will ease up in the second half of the year.

 

According to another source, the National Feed Bureau of the Agriculture Ministry, overall domestic grain consumption for this year will exceed 160 million tons, while overall production of industrial feed products will exceed 87 million tons, due to the relatively dynamic feed consumption and market in China. Thus, as a feed ingredient, the demand prospects for corn are very substantive.

 

In the light of falling corn prices lately and the rising frequency of domestic old grains auctions which thus adds pressure to the corn market, and taking into account the diminishing domestic corn stocks and uncertainty surrounding this year's corn production and quality, it is expected that corn prices in the near term will not fluctuate too much, but rather, will respond to slight changes just like the past weeks.