Guangzhou China Nov. 22, 2010 – In recent two months, most of the corn products' price in China has kept increasing. The price of 18 kinds of corn products, monitored by CCM each month, rises by 5.3% averagely in November over last month. Especially the fuel ethanol and starch sugar products, their prices increase the most. Chinese inflation, the US dollar's depreciation, the brisk market demand and the high cost of raw material are the main reasons for that.
After the global financial crisis in 2008, China and the US have conducted Quantitative Easing Policy in order to revive the country's economy as soon as possible. It means that the two governments make much more money circulate in market, which will arouse the inflation easily, and it does happen now. Currently, most of the international commodity prices are increasing. In the meantime, Chinese CPI and PPI in October increases by 4.4% and 5.0% respectively, and both of them hit a historical new high in recent two years. Many manufacturers and traders speculate to increase the price due to the inflation.
Brisk market demand is another supporter for price heading up of corn products. With the coming of Chinese Spring Festival (February 3rd 2011), most of the food processing manufacturers will enhance their production, so demand for most of corn products as food additive will also ascend in accordance. Besides, affected by high price of sucrose at present, many sucrose consumers are quite likely to use starch sugar and sugar alcohol to replace sucrose, which may make starch sugar and sugar alcohol price to increase.
As the key raw material of corn products, the high price of corn also causes their price surge. Although the new corn has been marketed, its price also runs at a high level. It's not easy to fall back due to corn supply gap, increased logistics cost, and the inflation throughout the country. Many experts estimate corn price will maintain its high level in 2011 as corn supply gap will appear in domestic market during the period.
However, Chinese government seems to make a big determination to crack down the inflation and try to decrease the price. CCM estimates that the price trend of corn products in the near future will be affected a lot by the government's policy.
Source: CCM International