November 13, 2008
China corn prices drop slightly, increasing supply a concern
Corn prices in China fell slightly in the week to Wednesday (November 19, 2008) as processors lowered their bid prices, while rising supply is likely to weigh on prices in the coming weeks, said traders and analysts.
Corn prices in Heilongjiang province, a major production base in the northeast, fell to CNY1,480(US$216.65) a metric tonne, down slightly from a week ago.
Prices in Jilin province, another producing region, were around CNY1,500(US$219.605)/tonne, little changed from a week earlier.
Corn processors in northeast production regions have lowered their bid prices on shrinking downstream demand, said an analyst in Beijing.
The China National Grain and Oils Information Center kept its forecast for corn output this year unchanged in its monthly report Wednesday, with output estimated to grow by 2.4 percent to 156 million tonnes.
Traders said rising supply due to a new harvest has made it more difficult for the government to support prices through state reserve houses' purchase plans
China's state reserve houses plan to buy 5 million tonnes of corn from the northeast production regions at CNY1,500(US$219.7)/tonne to support prices and protect farmers'incomes.
However, "overall sentiment is still quite bleak," said a trader in Beijing.
Meanwhile, demand for feedmeal as well as feedmeal production in the major consumption region in the south is falling after small firms shut down due to financial difficulties, so traders said they expect corn demand to be further affected.
Corn is mainly used in the production of feedmeal for livestock in China.