Domestic Chinese corn prices to ease as soy strengthens: CASDE

China’s domestic corn prices are set to stabilise while soybean prices rise despite an increase in acreage and yields, the Chinese Agricultural Department said in their monthly supply and demand update Tuesday.

Corn price rises should be capped by the release of stocks announced earlier in the month, while good demand and higher global soybean prices will be reflected in China’s domestic market.

The National Grain Trade Centre announced April 4 that it will release 7 million mt of domestic corn stocks from April 12, to ease the tight regional supply and restrain domestic prices rise further, the ministry said.

However, “considering that there is not much remaining surplus, increasing demand from processors and the transport issue due to weather, corn prices are unlikely to drop sharply,” the ministry said.

The ministry expects the domestic corn price to stabilise during the 2017/18 campaign, which started last October, at CNY 1,600-1,700/mt ($254-270/mt).

Notably, the agriculture department didn’t tinker with their previous March figures, keeping all supply and demand values for both corn and soy unchanged in its April release.

Soy imports to 96 million mt

Higher domestic production is unlikely to alleviate imports which are set to hit 96 million mt.

Planted acreage will grow 12.4% in 2017/18 to 8.1 million ha which will, combined with an expected yield increase of 0.3%, propel domestic production to 14.6 million mt.

Yet, the 1.66 million mt extra soybeans this season won’t temper China’s hunger for beans, pushing imports further up to hit an all-time high of 95.97 million mt, up from last year’s 93.49 million mt, the ministry said.

However, that forecast remains a rather conservative number compared to its American counter part which expects the world’s biggest buyer to purchase over a 100 million mt from overseas this season.

Concerned

The ministry remains “highly concerned about Sino-US trade frictions,” but points out that the dispute escalated at a time of Brazil unleashing its record crop onto the global trade.

The average price of imported beans during 2017/18 are expected at CNY 3,250-3,450/mt, with domestic prices ranging between CNY 4,175-4,375/mt.