September 29, 2003
China's Corn Market Weekly Report - China's Corn Prices Fell Amidst Market Stability in the North, Price Volatility Seen in the South (Week Ended September 26, 2003)
An eFeedLink Exclusive Report
With further increase in market supply of new corn during the week ended September 26, corn prices in northern China fell amidst market stability, whereas in the south, prices fluctuate in a volatile market.
As of September 26, the changes in medium grade corn prices were as follows:
Ex-warehouse prices remained unchanged over last week's prices in the provinces of Heilongjiang and Jilin, where prices stayed at around RMB960-980/ton and RMB 980-990/ton respectively;
Ex-warehouse prices in Liaoning province were within the range of RMB1020-1030 /ton;
On-board prices at Dalian port fell by RMB5/ton over last week's, to RMB1065 /ton;
Delivered-to-factory prices dropped by
RMB0-5/ton over last week's, to RMB1055-1080/ton in Hebei province;
RMB80/ton over last week's, to RMB1080-1100/ton in Henan province;
RMB40/ton over last week's, to RMB1060-1100/ton in Shangdong province;
RMB20-40/ton over last week's, to RMB 1100-1140 /ton in Jiangsu province;
Rail station delivery prices in Shanghai remained unchanged at RMB1120/ton;
Rail station prices in Zhejiang province increased by RMB20/ton over last week's, to RMB1180/ton;
In Jiangxi and Hunan/Hubei provinces, rail station prices fell by RMB10/ton and RMB40/ton over last week's, to RMB1150/ton and RMB1160/ton, respectively;
In the central part of Sichuan province, rail station prices also fell by RMB30/ton over last week's, to RMB1170/ton;
Delivery prices in Guangdong province were at RMB1220-1230/ton, up by RMB10-20/ton over last week's prices;
In southern part of Guangxi province, rail station prices rose by RMB30/ton over last week's, to RMB1250/ton;
In Fujian province, delivery prices were down by RMB10/ton over last week's, to RMB1190/ton.
Following improvements in weather conditions in China's northern and northeastern regions, increasing stocks of new autumn corn had been harvested and are now available in the market. As a result of the increase in new corn supply, prices started to slide in various places, with the regions in northern China reporting larger falls.
Over at the three eastern provinces, corn prices remained relatively firm on account of the confirmed reduction in new corn production in these areas. Also, with the approaching of China's National Day holidays, the frequency of transportation of passengers across different parts of China increased while that of freight transportation slowed down, thereby affecting the rate of corn delivery across various regions in China. This helped to avert some amount of seasonal market pressure on various parts of China in the short term.
Consumption demand in the eastern and southern regions of China continued to rise steadily, especially in the south, where demand from the poultry industry remained strong. Hence, corn prices in these regions continued to stay firm with some upward movements.
According to the latest statistics released by the Chinese Customs, China exported 1.182 million tons of corn in August this year. Total exports for the first eight months of this year amounted to 9.322 million tons, showing a 51% increase versus the total exports of 6.17 million tons last year.
It is reported that on account of the lower volume of corn production in China this year, there is a wider gap between the domestic supply of and demand for corn. Coupled with some other reasons, a drop in the issuance of official permits for new corn export can be expected in the nearby term. Moreover, a relevant governmental authority is currently monitoring the supply and demand positions of corn closely, indicating a possibility of a downward adjustment in the volume of China's corn export in the near future.
According to the estimate released by "China National Cereals, Oils & Foodstuffs Imp. & Exp. Corp" (COFCO), China's demand and supply gap for corn is around 16 million tons for year 2003/04. Despite this gap, China's corn export for year 2003 is still expected to reach 13 million tons, registering the highest level in recent years.
As for global corn market: following the price falls in early September, CBOT corn prices rebounded and continued to hover above the level of 220 US cents/bushel during the week. Compared to the prices for locally produced corn, prices for US corn are still much higher. This is a plus factor for China's corn export.
As previously forecast, China's corn market felt the pressure of the convergence of spot deliveries of corn supply this week. Fortunately, the pressure was eased by the strong consumption demand from southern China and the slow pace of corn delivery from the corn-producing regions. Hence, there was no drastic fall in China's corn prices during the week.
Overall, with the rapidly increasing pace of new corn supply reaching the market in the nearby term, market analysts are forecasting that corn prices in China are likely to fall to a certain extent. However, on the other hand, the extent of the price drop might be mitigated by the presence of strong consumption demand, both domestically and overseas.