October 23, 2008

    

China corn prices down but supported by government purchase plan

 

 

Corn prices in China were mostly lower in the week to Wednesday (October 22) on increasing supply, but prices were somewhat supported by the government's purchase plan.

  

However, corn prices in the northeast major producing areas were relatively stable as new corn hasn't entered the local market in large volumes yet.

  

Corn prices in the eastern part of major producer Heilongjiang province were at RMB1,420 to RMB1,480 a tonne, also stable from a week ago.

  

Corn prices in Dalian city were between RMB1,640 to RMB1,650/tonne, down from RMB1,660 to RMB1,670/tonne.

  

Higher corn output this year amid sluggish feedmeal and industrial demand has plagued corn prices.

  

China's grain output is expected to hit another record high this year, for the fifth year in a row, Li Xiaochao, spokesman for the National Bureau of Statistics, said Monday (October 20).

  

An increasing hog population and falling pork prices have hurt hog breeders' profits, said analysts.

  

Meanwhile, demand for starch remains weak as exports have been sluggish, said Tang Shaoming, an analyst at Tianqi Futures Co.

  

"The overall supply exceeds demand," he added.

  

However, the government's purchase of corn somewhat helped stabilize the market this week.

  

China's National Development and Reform Commission said it has started buying soybeans, corn, rice, rapeseed and cotton in major production regions to raise farmers' incomes.

  

The government is buying corn at RMB1,500/tonne in a major producing region in the northeast for reserves.