December 22, 2003
Analyzing China's Corn Price Trend in 2003 / 2004
An eFeedLink Special Report
Below in an abstract of the report: Analyzing China's Corn Price Trend in 2003 / 2004
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Corn Prices in China To Rise in Staggered Stages in 2003/04
Current global stockpiles of corn, after carrying over last year's stockpiles, continue to fall even as US corn output hits historic high this year. The signs of a recovery in the global economies have begun to show. At the same time, the global stockpiles of oil and grains have hit new lows.
For 2004, it is anticipated that there will be a substantial gap between the supply and demand of corn in the global market, a situation that is mirrored in China market. If unfavorable economic or weather conditions affect the output of corn in either the US or China in 2004, the global prices of the commodity will be poised for a bull run.
How do we better assess corn prices in China in 2004 after taking into consideration above factors
First Phase of Upward Price Movement for Corn in 2003/04
According to market analysts, the first phase of a steady increase in the prices of corn will last from November 2003 to the immediate period before Chinese New Year holidays in January 2004. In this phase, several favorable fundamentals will lead the market situation and the price movement of corn.
Downward Correction for Corn Prices in 2003/04
Even though prices of corn are forecast to be on an upward trend, there are also factors that may move against the rising prices. As prices are impossible to rise all the way up, market analysts forecast that corn prices would be due for a downward correction in the period between after-Chinese-New-Year holidays and before-the- spring-sowing season in the northeast region. In this period, factors that favour a price hike is not as strong as factors that can lead to a price fall. Factors that favour a price hike include the falling output of corn from the northern region and the carrying forward of the purchase of corns from the northeast region in three months time.
Second Upward Price Movement for Corn in 2003/04
According to market analysts, the price peaks for corn in this second phase will be higher than that of the first phase. The second peak would be reached in May-June 2004. The timing and motivating factor for this second peak can be explained by a number of factors.
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