by Agrimoney.com
China, whose poor wheat harvest has revived prices of that grain, may have given a prop to world corn prices too by lifting its support price for domestic farmers to levels well above those in global markets.
China's important National Development and Reform Commission said that it would lift by 6% to 2,220-2,260 yuan the price at which it will purchase corn from growers.
The uplift is aimed at supporting farmers, and avoiding them turning away from a crop crucial to keeping the country's huge hog herd fed, and its people in supplies of pork, China's most popular meat.
A US Department of Agriculture report overnight highlighted how prices of corn left over from last year are already 10% lower than last year, "due to bumper crops and a slowdown in industrial and feed use".
And prices worldwide this year face pressure from the prospect of a record US crop, following on from a record Brazilian harvest too.
Meanwhile, Chinese corn farmers face increasing production costs, with labour and land rental rates expected to increase by more than 10% this year, USDA staff in Beijing said.
'Competition is fierce'
The upgraded support price - while a little below the levels on the Dalian futures exchange, where corn for January closed up 1.0% at 2,364 yuan a tonne on Thursday- is equivalent to $362-369 a tonne, or about $9.20-9.40 a bushel, well above world market values.
Chicago corn for December closed at $5.02 ¾ a bushel on Wednesday, down one-quarter from highs reached 10 months ago, with prices in many other countries lower still, although China tends to buy from the US.
Iowa-based broker US Commodities, flagging that "competition is fierce" among corn exporting countries, said that "Ukrainian corn for October delivery is the equivalent of $4.50 a bushel on December corn futures".
'Will benefit imports'
The gap between upgraded support prices and international values looks like boost the incentive for China to lift corn imports – a sensitive market topic given the country's potential, as a huge consumer of the grain, to alter trade dynamics.
"The hike will benefit imports," an industry analyst with a Chinese official think-tank told Reuters.
Indeed, such a phenomenon has already played out in the cotton market, where Chinese purchases at prices well above market, aimed at supporting farmers, has lifted domestic prices, and so encouraged mills to look abroad for cheaper supplies.
Higher Chinese cotton imports have supported international prices, which remain at historically high levels.
This despite world stocks being at a record high level – although with more than half in China, free-market supplies are squeezed.
China is now reviewing its cotton support policy because of its unintended consequences, which have included lifting prices for domestic mills and so forcing business abroad.
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