CCM: Market price of potato starch continues rising in Q2 2016 09-08-2016

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.

 

For more information about CCM, please visit www.cnchemicals.com or get in touch with us directly by emailing econtact@cnchemicals.com or calling +86-20-37616606.

 

Tag: potato starch

 

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