It is Predicted that Corn Price will Further Drop in Oct in China

Date: 2015-10-21

“In Sept. 201 5, the long-awaited 2015 Notice on Adjusting the National Temporary Purchase and Storage Policy on Corn in Northeast China is issued in advance. China announces to reduce the purchase and storage price from USD348.2-USD354.5/t(RMB2,220/t-RMB2,260/t) to USD31 3.7/t (RMB2,000/t), an average drop of 1 0.7%. This is the first time Chinese government reduces the price since the policy has been implemented in 2008. At the same time, China’s 1 /3 of corn planting area will be adjusted. These acts mark the coming time of reform for China’s corn market.

Affected by the strengthened inventory pressure due to new grains and the reduced purchase & storage price, corn price continues to fall. This pulls down the prices of many deep-processed products of corn. The prices of corn starch, citric acid and xanthan gum hit the lowest in recent three years.

Regarding the company dynamics, Global Bio-chem and Henan Lotus who used to be the stars in corn deep-processing industry, try to introduce capital or restrict to get out of losses. However, the road ahead is not easy.

As for the international trade, the falling corn price also stimulates the export volume. Export volumes of many deeply processed products of corn maintain stable growth. Only glutamic acid recorded large decline in export volume in July 201 5 interfered by rising gross profit of downstream products and environmental problems.

It is predicted that corn price will further drop in Oct. pressured by the new corn that enters the market intensively. The dropping cost of raw materials is expected to relieve the losses of some corn deep-processing enterprises.

In this report, the USD/RMB exchange rate is USD1 .00=RMB6.3752 and USD/HKD exchange rate is USD1 .00=HKD7.7220 on 1 Sept., 201 5, sourced from the People’s Bank of China. All the prices mentioned in this report will include the VAT, unless otherwise specified”

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