The decreasing market purchasing price of corn during Feb.–March 2013 increased the temporary purchase volume of corn in 2012/2013 (when the market purchase price of corn from farmers decreases to lower than the temporary purchase price, temporary purchase will be launched). As of late March 2013, China Grain Reserves Corporation (Sinograin) had purchased 8.7 million tonnes of new corn in Northeast China. According to Jilin Corn Center Exchange Ltd., the temporary purchase volume of corn in Northeast China will exceed 14 million in 2012/2013.
Due to the sufficient supply and low quality of corn in Northeast China, domestic purchase price of corn from farmers decreased during Feb.–March 2013. For example, the market purchase price of moist corn from farmers decreased to about USD210/t in some areas of Heilongjiang, obviously lower than the temporary purchase price in 2012/2013 (please refer to Chinese government launches 2012 temporary reserve of corn from Corn Products China News 1212 for more details).
Owing to the snow, the sale progress of corn in Northeast China in 2012/2013 is slower than last year. Moreover, because the excessive rainfall increased the moisture content of corn, making it easy to turn moldy, farmers are eager to sell their moist corn when the temperature rises. But the demand for corn from downstream industries was not strong. As a result, intermediate traders reduced their purchasing prices of corn from farmers.
In order to protect the interests of farmers, Sinograin increased the temporary purchase of corn. First, it purchased corn from family farmers when they had a large amount of corn, decreasing transportation costs and increasing convenience for farmers. Second, it added 32 warehouses with a total capacity of 700,000 tonnes for the temporary purchase of corn in Hulunbei’er and Xing’anmen in Inner Mongolia for the warehousing of corn in these regions. Third, it purchased off-grade corn in Heilongjiang at a lower price considering that there is a quantity of corn with a high moldy kernel rate in the area. As a matter of fact, farmers have a certain amount of corn that fails to reach even the lowest quality standard of temporary purchase corn under the national standard according to relevant documents. Lastly, it applied to lower the quality standard of corn in some unimportant respects such as color.
As a result, Sinograin purchased much more new corn in 2012/2013 over 2011/2012 especially in Heilongjiang, where the market purchase price of corn is the lowest and the quality of the product is not good. According to Sinograin, the temporary purchase volume of corn had reached 5.5 million tonnes in Heilongjiang as of late March 2013.
The large quantity of temporary purchase of corn will relieve the oversupply of domestic corn in H1 2013 considering that the main consumption fields of corn, feed and corn deep-processing industries, will be gloomy in H1 2013. Meanwhile, the government owns plenty of corn in stock, increasing its regulatory capacity in China's corn market in the future.
The above news was sourced from Corn Products China News 1304, issued by CCM in April.
Contents of Corn Products China News 1304:
Welcome Pharmaceutical slapped with an antitrust suit by the US
EFSA rejects erythritol's use in soft drinks at the level of 2.5%
Chinese corn products Imp. & Exp. analysis in Feb. 2013
Sales volume of Longlive Bio-technology's cellulose ethanol likely to soar in 2013
H7N9 bird flu impacts corn products used as feeds
China's import price of corn from the US not to increase in 2013
COFCO Biochemical's net profit decreases by 48% in 2012
Chinese government continues subsidy policy for good-quality seeds
MIIT announces elimination targets for inferior capacities in 2013
What will the new standards for plasticizers bring to domestic edible alcohol
Decreasing market purchase price of corn increases the temporary purchase volume
Domestic market price of sugar continues to decrease in the first three months of 2013
Corn Products China News, a monthly publication issued by CCM on 20th, features “Supply and Demand”, “Import and Export Analysis”, “Price Update”, “Market & Company Dynamics”, “Policy”, “Corn Supply” and other more information researched and reported by CCM’s professional journalists. It is a reliable intermediate for you to know more about the corn industry in China even in the globe.
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