(Adds China purchase of U.S. corn, total U.S. purchases to
By Hallie Gu and Shivani Singh
BEIJING, Oct 14 (Reuters) – China’s corn futures
hit a record high on Wednesday as investors bet on higher prices
for the grain because of crop damage from typhoons this year and
due to Beijing’s efforts in years past to whittle down its
once-mammoth state reserves.
The milestone came as China bought another 420,000 tonnes of
U.S. corn, adding to record purchases topping more than 12
million tonnes this year, according to the U.S. Department of
The most actively traded corn futures on Dalian Commodity
Exchange for delivery in January hit 2,595 yuan
($385.14) per tonne, the highest on record.
China’s corn output is expected to fall this year after
typhoons flattened crops in parts of the country’s northeastern
corn belt, further stoking supply concerns after Beijing ran
down its massive state stockpiles over the last several years.
The blistering rally in such a key feed sector staple –
prices are up nearly 14% since early September despite the
ongoing harvest – has raised expectations of additional crop
Late-season weather damage to fully-formed plants in key
production zones has also clouded outlook on the scale and
quality of the emerging crops.
Corn acreage in some regions of Heilongjiang province also
fell as farmers switched to soybeans, while output from Liaoning
and Jilin provinces is expected to drop due to drought, said
Meng Jinhui, senior analyst with Shengda Futures.
“The stockpile has been sold out. The market strongly
expects supply shortages, and has gone bullish (on futures,)”
Traders, dryers and end-users are scrambling to buy corn,
said Yuan, manager of a grain drying operation in Heilongjiang,
the country’s top corn producer, where supplies from the
just-harvested new crop have begun to enter the market.
“Many people believe prices will rise further,” said Yuan,
who was willing to be identified only by his surname due to the
sensitivity of the matter.
Prices have also gained in other key corn hubs including
Shandong, Hebei and Henan provinces, analysts and traders said.
Purchase prices for the new crop are at least 30% higher
than in recent years, according to farmer Song Yongquan, who
manages a cooperative that grows around 1,000 mu (67 hectares,
or 166 acres) of corn in Henan.
That’s after a temporary dip in prices in late September as
the newly harvested supplies hit the market.
“The price already hit a low point when the new crop kicked
in,” said Song. “Prices will go up further gradually.”
($1 = 6.7400 yuan)
(Reporting by Hallie Gu and Shivani Singh in Beijing,
additional reporting by Karl Plume in New Jersey; Editing by Tom
Hogue, Nick Zieminski and Steve Orlofsky)
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