December 11, 2008
Corn prices in China's major producing areas were lower in the week to Wednesday (December 10) on weak consumption and a bearish demand outlook.
Corn prices in Songyuan in the major producing Jilin province were RMB1,320 to RMB1,380 a tonne, RMB30-RMB40 lower on week.
Prices in Dezhou in Shandong province were around RMB1,400/tonne, down from RMB1,430/tonne a week ago.
Buyers weren't purchasing actively despite lower prices as they expect prices to fall more, said analysts.
While the government has been in the process, since last month, of buying 10 million tonnes of corn from key producing areas to support the market amid weak demand, corn prices continue to be low as there are few other buyers apart from the government, said Tang Shaoming, an analyst at Tianqi Futures.
He said the feedmeal processing plants aren't building up their stocks actively as they expect pork prices to be weaker after year-end holidays, despite their recent rise.
A Chinese official on Wednesday denied speculation the government may issue a quota for corn exports to soak up excess stocks from the domestic market.
Falling domestic corn prices have sparked expectations the government may issue export quotas for either 3 million or 5 million tonnes of corn.
But even if the quota is given, it may not yield the desired result as global corn prices are lower than current local prices, said Gu Lifeng, a corn manager at major grain exporter COFCO Ltd.
China's corn output this year is expected to reach 156 million tonnes, up 2.43 percent from a year ago, said China National Grain and Oils Information Centre in its report issued Wednesday.