August 14, 2008


China corn prices lower on sluggish buying, drop in futures


Corn prices in China's major producing areas were lower in the week to Wednesday (August 13) on sluggish buying.


A drop in futures prices also helped to push cash prices lower.


Corn prices in Yushu area in Jilin, a major producing province, were around RMB1,610 a tonne, down from RMB1,620-RMB1,650/tonne a week before.


Corn prices in Qingdao in Shandong province were at RMB1,760/tonne, compared with RMB1,800/tonne last week. Ample supply and light demand has helped to push corn prices lower, said analysts.


Buyers are staying on the sidelines to wait for a further decline in prices, while sellers were unwilling to sell at lower prices due to high costs, the Jilin Province Grain Administration said in a note.


Weak demand from the feedmeal sector and continued sales from state reserves both weighed on the market.


On Tuesday (August 12), the government sold 62,292 tonnes of corn from its reserves, or 18 percent of the 348,772 tonnes it planned to sell.


The corn was sold at an average price of RMB1,543/tonne, down from RMB1,547/tonne last week.


Weather and temperature in northeast China's major corn producing areas has been good, said China Corn Market Network, but it added that the possibility of dry conditions in the next 20 days may cut production.


Government policies are likely to keep corn prices under pressure in the coming one or two months, but high input costs will help to support prices as well, said analysts.


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