August 18, 2003


China's Corn Market Weekly Report: Prices Largely Remained Stable with Some Regions Showing Significant Increase

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Corn prices in various regions largely remained stable for the week ending August 15, with prices in a few regions falling slightly, while prices in Zhejiang and Jiangxi showed some significant increase. The prices of medium grade corn in China as of 15 August are as follows:

    • Ex-warehouse prices in Heilongjiang and the Jilin region were RMB920-960/ton and RMB980-990/ton respectively;
    • Ex-warehouse prices in the Liaoning region were RMB1020/ton;
    • Average ex-warehouse price at Dalian port was RMB1060/ton;
    • Delivered-to-factory prices in the Hebei region were RMB1040/ton;
    • Delivered-to-factory prices in the Henan region were RMB1060/ton;
    • Delivered-to-factory prices in the Shandong region were RMB1030-1050/ton;
    • Delivered-to-factory prices in the Jiangsu region were RMB1100/ton;
    • Rail station prices in the Shanghai region were RMB1090/ton.

       Price in the aforementioned regions remained unchanged from the previous week.

    • Rail station prices at the Zhejiang region rose RMB30/ton from the previous week to RMB1120/ton;
    • Rail station prices at the Jiangxi region rose RMB70/ton from the previous week to RMB1160/ton;
    • Rail station prices in Hunan and Hubei regions remained unchanged from the previous week at RMB1120/ton;
    • Rail station prices at central Sichuan fell RMB10/ton from the previous week to RMB1150/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 regions remained unchanged from the previous week at RMB1140-1160/ton. 

515,000 tons of stockpiled corn was sold at an auction held in Jilin province's Changchun municipality on August 14. The highest transacted price was RMB950/ton, the lowest was RMB850/ton, average transacted price was RMB900/ton. Trading at the auction was active due to the large number of companies participating in the buying and selling; in addition, the final transacted prices are also higher because of the higher overall quality of the corn being auctioned and more instances of buy-back by food companies.


At the auction, it was found that the market has relatively high demand for stockpiled corn, this is especially so with Jilin province's promotion of the use of ethanol petrol for vehicles, resulting in a higher demand for corn in the country. Jilin province has reported that the first production line for the ethanol fuel project, which would produce 600,000 tons of fuel a year, would commence operation on 19 September. By then, Jilin's demand for corn for the production of ethanol fuel would reach 900,000 tons.


Coincidentally, a recent feed forecast report by the Economic Research & Survey (ERS) of the US Department of Agriculture emphasized the efficacy of using corn in ethyl alcohol production. It estimated that the total consumption of corn in these few areas for 2002/2003 would exceed the actual consumption in 2001/2002 by 12%. Therefore, it is highly probable that the use of corn in the ethyl alcohol industry could increase dramatically in future.  

On the other hand, as the various ports in the country have been storing corn in their warehouses, these warehouses are now filled with the crop; as at August 10, the ports in Shenzhen and Guangzhou have close to 250,000 tons of corn in storage, but ships are still arriving with the crop. At the same time, the US Department of Agriculture made a slight adjustment downward in corn production in its latest monthly report. This caused the prices of CBOT corn futures, which has begun rebounding earlier, to rebound even more strongly.


The difference in export prices for China and US corns has narrowed, the competitiveness of China's corn has weakened, and with the recent accumulation of corn in Chinese ports, the prospects of corn exported by China has been affected to a certain extent.   


Overall, as there has not been any significant reduction in demand for China's corn in both overseas and domestic markets; with supply unlikely to increase dramatically in the short term, many traders are of the views that corn prices may fluctuate as a result of external factors, overall prices would remain stable, moving within the current band.