October 13, 2008

   

China's corn output to increase; demand weakens price

China's corn output is expected to go up this year, but corn price may keep sliding due to lesser demand in following months.

 

September is the key month to corn production. The major corn production regions, such as northeast China, north China, had better weather conditions this year during corn growing periods.

 

The delayed disastrous weather in northeast China, and less rain in north China all helped to improve corn output.

 

In consideration of conditions of agriculture, weather and grain, China's corn output is predicated to reach 155-160 million tonnes this year, up 3-8 million tonnes from the previous year.

 

As corn output is basically fixed, the price change is determined by demand.

 

Breeding industry's demand for corn is less than expected this year due to cut in profit and even losses in raising swine and poultry.

 

Suppressed by weak demand, corn consumption by industrial sector is difficult to grow in stern situations of starch sugar production.

 

Sucrose price went down from 4,500 RMB/tonne at the beginning of the year to the current 3,000 RMB/tonne, which has also squeezed both the profits and the sales of starch sugar.

 

As weather is turning colder in the fourth quarter, demand of starch sugar will be decrease further due to the slack season of beverage industry.

 

As domestic demand is weaker than expected and export volume hard to increase greatly in such a short period of time, the corn output rise will repress its price.

 

September saw corn price dived by 10-30 RMB/tonne at Shenzhen port. The market predicates corn price may keep sliding after marketing of new grain.