Guangzhou China Feb. 18, 2011 – In order to guarantee the smooth running of national corn temporary reserve to be launched soon, large corn deep-processing manufacturers with state-owned status in Northeast China (Jilin, Liaoning, Heilongjiang and Inner Mongolia) were required by Chinese government to suspend corn purchasing from farmers directly On Jan. 20, 2011. Reserve volume in Northeast China is considered to be over 10 million tonnes and it is reported that reserve areas will be expanded to Shandong, Hebei, Henan Provinces, with total reserve volume of 1 ~ 2 million tonnes in these districts.
Obviously, the national corn temporary reserve will have some effects on Chinese corn market in 2011. Firstly, corn price may increase in the short run. "It's predicted that corn price will increase to a further step in future, but the extent is still uncertain.", Said an insider in Baolingbao Biology Co., Ltd. Actually, on Feb.13, 2011, corn price increased slightly to USD335/t in Guangzhou, USD295/t in Changchun and USD315/t in Weifang, up 4%, 2%, and 3% respectively over Jan. 22, 2011.
Besides, peasants would like to sell their corn to manufacturers at a higher price, since they consider that they can sell their corn to government at last if there are still corn remained.
Secondly, corn price may maintain uptrend in the long term. Parts of this national corn temporary reserve will be transferred to national reserve, which means the corn supply will be decreased this year, and it may support corn price to head up in Q2 and Q3 this year, which is the tightest period for corn supply/demand. Based on the high purchasing price of national corn temporary reserve over previous years, the auction price must be raised this year, which also support corn price to increase.
Source: CCM International