In Q2 2016, the market price of potato starch rises steadily. According to
CCM's price monitoring, the figure in May was:
-
Top grade: USD986.09/t (RMB6,337/t), up
0.30% MoM but down 6.10% YoY
-
First grade: USD938.98/t (RMB6,062/t), up
0.23% MoM but down 9% YoY
Monthly market price of potato starch in China, 2014-2016
Source: CCM
The rising market price of potato starch is mainly ascribed to following
factors:
1. Increasing potato price
The extreme weather such as cold wave hit Northwest China in early-2016,
seriously reducing the yield of potato in Q1. Meantime, as there are no new
potatoes flowing into the market in April-May, the insufficient supply pulled
up the price. According to CCM's research, the potato market price increased
from USD267/t (RMB1,731/t) in Jan. to USD437/t (RMB2,565/t) in May.
2. Reducing inventory of potato starch
Data from CCM show that as of 26 May, the potato starch inventory amounted to
about 108,000 tonnes in China, 70,000 tonnes lower than the 2016 end-of-quarter
inventory, and 37,000 tonnes lower than the same period last year. Of this, The
inventory consumption of potato starch hit the highest in Northwest China –
36,000 tonnes in March-May. Notably, the inventory remained relatively tight in
Northeast China – only 6,000 tonnes in May.
Inventories of potato starch in China, May 2015/ 2016, tonne
|
Region
|
May
2016
|
May
2015
|
|
Northwest
China
|
26,000
|
28,000
|
|
Northeast
China
|
6,000
|
23,000
|
|
North
China
|
19,000
|
25,000
|
|
Nationwide
|
108,000
|
145,000
|
Source: CCM
Notably, the rising price improves manufacturers' gross profit (=average
ex-works price - purchase price of raw material / flour yield - processing
expense). According to CCM's research, gross profit in May:
-
North China: USD194/t (RMB1,250/t), the
same as that in March
-
Northeast China: USD12/t (RMB75/t),
USD7.70/t (RMB50/t) higher than March
-
Northwest China: USD139/t (RMB900/t), vs.
USD108/t (RMB700/t) in March
However, the rising potato starch price pares down its price advantage among
other starches in China. The prices of cassava starch and corn starch all
maintained low affected by the sliding prices of their raw materials.
Specifically, the ex-works price of corn starch (northern) was USD342.92/t
(RMB2,214/t) in May, down 29.50% YoY. And the market price of cassava starch
even hit a record low to USD432.36/t (RMB2,792/t), down 19.95% MoM.
The market
price gap between potato starch (top grade) and cassava starch widened to
USD100/t (RMB645.87/t), up 53.16% YoY, further reducing the price advantage of
potato starch.
Monthly market price gap between potato starch (top grade) and cassava starch
in China, 2015-2016
Source: CCM
At present, China's potato starch market enters the slack season. What's more,
domestic manufacturers and major distributors are unwilling to purchase potato
starch as they focus on consuming the existing inventories.
In regard to the raw material, new potatoes start to enter the market in
Shandong Province. The increasing market supply stops the starch price from
rising. In addition, the planting period of potato in some regions has come to
an end. Influenced by the cancelation of the purchase policy of corn for
temporary, farmers in Northeast China are likely to switch their fields from
corn to potato. As a result, the potato planting area will increase by 30% in
Northeast China this year.
To sum up, the price of potato starch may reduce in later period due to the
sufficient raw material supply.
This article comes from Corn Products China News 1606, CCM
About CCM:
CCM is the
leading market intelligence provider for China’s agriculture, chemicals, food
& ingredients and life science markets. Founded in 2001, CCM offers a
range of data and content solutions, from price and trade data to industry
newsletters and customized market research reports. Our clients include Monsanto,
DuPont, Shell, Bayer, and Syngenta. CCM is a brand of Kcomber Inc.
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Tag: potato starch