August 12, 2003



China's Corn Market Weekly Analysis - Corn Prices in Various Regions Largely Remained Stable


Corn prices in various regions largely remained stable for the week ending August 8 despite unfavourable weather conditions. The only exception is the Shandong region, where the fall in prices is more significant. The prices of medium grade corn in China as of 8 August are 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;
    • Ex-warehouse prices in Liaoning region and Dalian port were unchanged from the pervious week at RMB1020/ton and RMB1060/ton respectively;
    • Delivered-to-factory prices in the Hebei region fell RMB10/ton from the previous week to RMB1040/ton;
    • Delivered-to-factory prices in the Henan region remained unchanged from the previous week at RMB1060/ton;
    • Delivered-to-factory prices in the Shandong region fell RMB30-50/ton from the previous week to RMB1030-1050/ton;
    • Delivered-to-factory prices in the Jiangsu region fell RMB10/ton from the previous week to RMB1100/ton;
    • Rail station prices in the Shanghai region and central Zhejiang remained unchanged from the previous week at RMB1090/ton;
    • Rail station prices at Jiangxi region fell RMB10/ton from the previous week to RMB1090/ton;
    • Rail station prices in Hunan and Hubei regions fell RMB20/ton from the previous week to RMB1120/ton. Rail station prices at central Sichuan remained unchanged from the previous week at 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 fell RMB0-10/ton from the previous week to RMB1140-1170/ton.

The growth of corps is most vigorous in the month of August. High temperature, plenty of moisture and sufficient sunlight are required for corns from budding to sprouting, soybeans from blooming to bearing of pods and rice from jointing to heading. However, the temperature in most of the Northeast region has been low recently and there has been insufficient sunlight. The persistence of these conditions would be detrimental to the growth of corns, casting a shadow over corn production and quality.


However, the latest forecast by China's State Cereals and Oil Information Center indicated that as the weather conditions at the corn-producing regions have improved, it predicted that China's corn production for 2003 to be 116 million tons. This is higher than the earlier forecast.


According to another source, total quantity of old stockpiles coming out of warehouses and auctioned off this year is 15 million tonnes. As the pace of auctioning off old stockpiles quickens, the quantity of corn coming out of warehouses in the Northeast region has shown significant quarterly growth since the second half of July. However, consumption across the board did not show a significant rise, warehouses at ports located in the south are still well stocked with corn, with almost every one filled to the brim with the crop.


As for the International market, the prices of CBOT corn, which have been falling earlier as a result of the favourable weather conditions in the mid-western region, have shown signs of stabilising this week. In addition, the enduring drought in the mid-western region of USA has caused the optimal growth rate of corns produced in the region to drop.


The price of corn futures has started to rebound. Next week, the US will announce the latest monthly supply and demand report for August. This is the final report for 2002/2003, and is one of the most important reports in determining the eventual production quantity. Therefore, it is of much interest to the market, and is expected to have a bigger impact on the future movement of CBOT corn prices.


Overall, the growth of corns in the new season has not displayed any cause for optimism due to the weather conditions, while consumption has stabilized recently after rebounding strongly earlier. China's corns will continue to face competition from the low-priced corns from the US. Therefore, domestic corn prices are not expected to rise dramatically, but would continue its erratic movement.