Corn Forbidden to Purchase from Farmers in some Areas of China

Feb. 23, 2011 - PRLog -- On Jan. 20th 2011, large corn deep-processing manufacturers with state-owned status in Northeast China (Jilin, Liaoning, Heilongjiang and Inner Mongolia) were required by Chinese government to suspend corn purchasing from farmers directly in order to guarantee the smooth running of national corn temporary reserve to be launched soon, according to an article released in Corn products China News 1102 by CCM International.

After this news released, some large manufacturers have suspended purchasing corn from farmers directly, like COFCO with subsidiaries in Northeast China and Dacheng Group Co., Ltd., as well as most large corn deep processing manufacturers in Jilin. However, corn traders, like China Grain and Logistic Corporation, are not forbidden, and they were positive to purchase corn before Chinese Spring Festival (Feb. 3rd 2011). The date that manufacturers can resume their corn purchasing from farmers has not been come out yet.

Actually, the release of this reserve policy is somewhat beyond public expectations. In previous years, the national corn temporary reserve normally began together with national soybean temporary reserve in November and December, 2010. However, in 2010, the national soybean temporary reserve began on Nov. 1st 2010, but national corn temporary reserve didn’t run at the same time. Thus, public believed corn reserve may be canceled during 2010 to 2011 in view of the high corn price and tight corn supply/demand relationship. However, Chinese government has to implement the national corn temporary reserve for the following reasons. On one hand, national corn stock has decreased to the lowest level, and it needs to be replenished. An insider disclosed that parts of national corn temporary reserve would be transferred to national reserve, which would not be circulated in market normally.
With such regulation,

Concerning the price, the purchasing price of the third grade corn in national corn temporary reserve in Northeast China is planned to be around USD272/t which is much higher than previous years. According to CCM’s Corn Products China News 1102, some factors may also influence the price, such as China’s winter drought which may affect the purchasing price of corn.

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