LONDON, April 21, 2016 /PRNewswire/ -- In 2016, the Chinese government formulates a series of policies to reduce the corn inventory. Provinces like Heilongjiang all release plannings to reduce the planting area of corn. The directional selling of old corn is the first step for the destocking of corn and China has issued the preliminary list on 16 Feb. This led to increasing amount of corn being put into the market, causing the corn price to decline in later period.
In March 2016, corn price falls steadily. The prices of corn processed products remain low affected by the corn price. For instance, the market price of corn starch and citric acid has reduced for 3 consecutive months and two consecutive months respectively. It is predicted that the figures would keep falling influenced by the corn price. But it should be noted that the VC price keeps stable. However, it will not rebound largely in a short run due to the overcapacity.
As for the imports and exports, the export price of furfural drops to the lowest since Jan. 2014, and the export volume also meets downward trend. In the face of the negative economy worldwide, China's export volume of furfural would keep declining.
The price of soybean meal also continuously decreases in 2016. It is estimated that the price would keep falling in later period ascribed to the high-yield South American soybean and the weak downstream demand.
On 1 March, Meihua Bio released the 2015 financial report. As one of the largest MSG and amino acid producers in China, Meihua Bio is planning to compress the MSG business and invest more into the amino acid production. It hopes to transfer the business focus to make high added-value amino acid as its profit growth point.
As China's largest oligosaccharide producer, Longlive Biotechnology actively develops the overseas business. On 2 March, it announced to march into the European market, laying a foundation for the oligosaccharide promotion in the overseas additive area.
Regarding the overseas market, both Vietnam's canceling the import tariff of MSG and Canada's expanding the application of erythritol are good for China's merchandise export.
The USD/RMB exchange rate in this report is USD1.00=RMB6.5385 on 1 March, 2016, sourced from the People's Bank of China. All the prices mentioned in this report will include the VAT, unless otherwise specified. The Chinese government is planning to carry out directional selling on old corn. CCM predicted that the corn produced in Northeast China in 201 2 would be the major grain resource involved in this directional selling and the price would be more likely lower than USD235.90/t (RMB1 ,500/t). Alcohol and fuel ethanol enterprises are the main subjects in directional selling. But as this plan caused excessive corn in later period, the corn price has fluctuated and declined since mid-Feb. 2016.
Though some provinces in China reduce the corn planting areas in 201 6 to respond to the Structure Adjustment Plan on Corn Planting Area in Sickle-shape Region (201 6-2020), it is predicted that this reduction still works little on the output of corn as the inventory is still full and the supply is stable as well.
China's market price of corn starch continued falling affected by the decreasing market price of corn and the reduced downstream demand. It is predicted that the corn starch price would keep falling in later period for mainly reasons including the cancelation of the export tax rebate policy.
On 2 March, 201 6, Longlive Bio-technology announced to put its XOS into the European feed market in order to promote XOS in overseas feed markets. Also, its performance is being negatively affected by low fuel ethanol prices.
In 201 5, Guangji Pharmaceutical turned losses into gains, thanks to rises in the price of VB2 and VB6. However, the company still faces some pressure from environmental protection and its own simplistic product structure.
On 1 March, 201 6, Meihua Bio released its full-year financial report of 201 5, which showed that the company recorded a increase in its total revenue and a fall in its net profit. Meihua Bio is also reducing the proportion of MSG business.
China's market price of soybean meal keeps falling in Q1 201 6 affected by the declining raw material price and weakening demand. It is predicted that the price would continuously decrease in later period in consideration of the high-yield South American soybean, stable inventory and the not-strong downstream demand.
In Jan. 201 6, China's exports of furfural recorded declines affected by the falling corn price and crude oil price, as well as the rising domestic inventory. CCM predicted that the export volume of furfural would keep falling in 201 6 in the face with the negative global economic environment and the international situation.
In Q1 201 6, the market price of VC in China remained low and stable. Besides, because of overcapacity and production expansion, the price is unlikely to rebound significantly in the short term.
China's citric acid price remains low in Q1 201 6 and it is likely to decline further in the coming two months. As the market price drops, the export price will also fall.
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