August 11, 2011

 

 

Corn's prices rose to a fresh high in the week to Wednesday (Aug 10), with overall demand rising and supplies remaining tight ahead of the fall harvest.

 

In major cities in the eastern Shandong province, where feed mills and processors have a strong presence, the average price rose about RMB60 (US$9), or about 2.5%, to around RMB2,450 (US$382)/tonne.

 

In the northeastern provinces of Heilongjiang, Jilin and Liaoning, as well as Inner Mongolia Autonomous Region, prices rose around 1% to RMB2,110-2,240 (US$329-349)/tonne. The combined annual output of these regions accounts for about 37% of the nation's total.

 

Corn prices have risen more than 20% so far this year.

 

The nation's average wholesale corn price was RMB2,380 (US$371)/tonne as of August 3, up 0.9% from a week earlier, the National Development and Reform Commission (NDRC) said.

 

"Corn stocks with farmers in northeastern China are almost sold out, forcing traders to raise bid prices to acquire some grain," the Zhengzhou Grain Wholesale Market said in a research note.

 

Traders are also reluctant to sell, despite having limited inventories, as they expect prices to rise further before the harvest, it said.

 

China offered only 17,374 tonnes from reserves this week and sold 16,766 tonnes. The volume was sharply lower than last week's 34,665 tonnes and far below the weekly offers of 1.8 million tonnes at the beginning of the year, indicating that state inventories are very low.

 

However, it still is not clear if, or when, the government will sell imported corn from reserves.

 

Meanwhile, the hog-to-corn price ratio, an indicator of returns from hog production, fell for the week in a row as hog prices have started falling though corn prices continued to climb, the NDRC data showed.

 

On another note, China sold all of the 16,499 tonnes of state corn reserves it auctioned in Anhui province at an average price of RMB2,028 (US$316)/tonne Tuesday (Aug 9), sources reported.