Farmers reluctant to sell corn as prices lower

Chinese farmers in some major corn-growing regions have shown reluctance to sell corn at prices lower than what they had expected due to higher production costs and grain loss from natural disasters.

Data from the Ministry of Agriculture show that the average corn purchase price in China grew 5.8 percent from the beginning of the year to 2,309.7 yuan (366.94 U.S. dollars) per tonne on Aug. 30.

Prices began to fall after September, and average prices have remained at around 2,170 yuan per tonne since Oct. 18, down by more than 6 percent compared with late August.

In northeast China's Jilin Province, corn production dropped by up to 30 percent in some major growing regions because of production losses from wind and insect disasters earlier this year.

Meanwhile, prices of local agricultural materials surged by 15 to 20 percent this year, said Deng Anfu, head of the Songyuan grain depot under the China Grain Reserves Corporation.

"Farmers have very high expectations for corn prices this year. They are unlikely to sell at prices below their expectations," Deng said.

The low purchasing price was partly due to weak demand from corn-processing companies, which have been affected by the current economic slowdown.

China's economy grew by 7.4 percent year on year in the third quarter, slowing for the seventh straight quarter and down from 7.6-percent growth in the second quarter and 8.1-percent growth in the first quarter.

Experts said corn prices will not see sharp drops in the future due to the relatively inelastic demand for feedstuff in China.

Zheng Guichen, deputy manager of Changchun Dacheng Industrial Group, a leading corn processor in China, said the country's feedstuff demand has seen annual growth of around 5 percent in past years.

Zheng forecast that China will demand 180 million tonnes of feedstuff this year.

"Among the total demand, 120 to 130 million tonnes are inelastic and 65 percent is made of corn," he said.