Himfr Report: Maize Prices Driving a Rise in Feed Prices

Jun 24, 2010, 10:00 ET from Himfr.com

BEIJING, June 24 /PRNewswire-Asia/ -- Himfr.com, one of China's leading B2B search platforms with more than 30 B2B industry websites to its name, reports on a rise in feed prices driven by the price of maize.

Himfr reports that in 2009, maize transaction prices dropped to their lowest in two years, at 1,330 RMB per ton. While from March of this year, maize prices began sharply rising, with a rise from 1,762 RMB to 2,000 RMB per ton. In the non-producing areas of Jiangsu and Sichuan, corn prices have already reached 2,010 RMB / ton.

China is not experiencing a shortage of maize. The rise in price is mainly due to last year's drought. Among agricultural products, the rise in wheat and corn prices has been relatively low. Wheat rose 8% last year, rice rose 14%, and corn 20%, while cereals rose 50%-60%, and some grains and field crops doubled in price. The key issue is the market's inflation expectations. People believe prices will continue to go up. "

The current supply stock is about 120 million tons. Major demand comes from the use of maize in animal feed, with feed utilizing about 90 million tons of corn. Alcohol manufacturers require 30 million tons, while human consumption accounts for about 14 million tons. In the past, Chinese corn exports amounted to about 300-400 million tons each year. These past two years have seen decreased export numbers as the state has apportioned more corn reserves for the development of ethanol. 2009 saw corn production reduced by about 10 million tons. Feed demand decreased, export stagnated, and alcohol usage also reduced, basically offsetting the reduction in production.

The rise in corn prices is not the biggest in all agricultural products, but the impact may be greatest, because it will affect the cost of feed and food processing.

Feed is becoming more expensive, and this is mainly because of corn prices. Corn accounts for 60-70% of feed, while the cost per ton has increased several hundred RMB compared with last year, and is expected to increase by at least another 20%.

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