November 11, 2010

China corn prices climb amid lower reserve speculation

China's corn prices in major producing areas rose slightly in the week to Wednesday (Nov 10), amid signs that government reserve levels are running low.

Prices in Jilin province were around RMB1,580 (US$238) a tonne, about RMB20 (US$3) higher from a week ago, but prices in Jiamusi in Heilongjiang province were RMB1,360-1,500 (US$205-226)/tonne, largely unchanged on week.

Government corn reserve auctions suggest demand waned this week to 23% from 31% last week.

However, the volume offered this week was substantially smaller, indicating the government may be running low on corn reserves.

State officials have been keen to portray continuing strength in China's grain reserves, but analysts have long questioned if months of large auctions amid sharp price rallies have worn down these stockpiles.

In an unusual move Tuesday, the China National Grain and Oil Information Centre combined two sets of weekly corn auction data - usually issued separately - into one, giving the appearance of a larger single auction.

The government usually conducts two separate corn auctions a week: a central reserve auction to try to influence supply and prices, and a second auction to move corn from northeastern producing areas to southern consumption areas.

Meanwhile, China exported 112,235 tonnes of corn in January to October, an increase of 26.2% from the same period last year, according to statistics released by the General Administration of Customs (GAC) on Wednesday.