October 18, 2007

China corn prices stable, may be pressured by new harvest

Corn prices in China were mostly stable in the week to Wednesday, but analysts foresee some downward pressure on prices in coming weeks as a new harvest is on the way.

In Jilin, China' largest corn-producing province, prices of average quality corn were quoted around RMB1,400-RMB1,500 a tonne, unchanged from last week.

"The market was actually quiet in the past week. While prices are likely to be mostly stable in the next few weeks, they may have some downward pressure as the new harvest is coming," said Liu Gang, corn analyst at Shanghai JC Intelligence Co., an agricultural commodities information provider.

The harvest usually comes to the market around mid-November.

In Guangdong province, a major consuming region in the south, corn prices were around RMB1,700 a tonne, little changed from a week ago.

However, "we've seen demand for feedmeal fell slightly, but it' not a big concern so far," Liu said.

Traders said after the week-long holiday in May and October, feed demand usually falls, due to fewer poultry stocks.

"I think the focus is still on output this year, whether it will be higher or lower from last year', and this will turn out to bring a much bigger impact to prices later on," Liu said.

The China National Grain and Oils Information Center, along with some big domestic agricultural commodities traders, still forecast higher output this year, while some independent research institutions estimate lower production, because of unfavorable weather conditions.