China corn futures hit record high amid worries over crop damage, supplies
By Hallie Gu and Shivani Singh
BEIJING, Oct 14 (Reuters) - China’s corn futures hit a new record high on Wednesday as investors bet on higher prices for the grain because of crop damage from typhoons this year and due to Beijing’s efforts in years past to whittle down its once-mammoth state reserves.
The most actively traded corn futures on Dalian Commodity Exchange for delivery in January hit 2,566 yuan ($380.70) per tonne, the highest on record.
China’s corn output is expected to fall this year after typhoons flattened crops in some parts of the country’s northeastern corn belt, further stoking supply concerns after Beijing ran down its massive state stockpiles over the last several years.
Corn acreage in some regions of Heilongjiang province also fell as farmers switched to soybeans, while output from Liaoning and Jilin provinces is expected to drop due to drought, said Meng Jinhui, senior analyst with Shengda Futures.
“The stockpile has been sold out. The market strongly expects supply shortages, and has gone bullish (on futures,)” Meng said.
Traders, dryers and end-users are scrambling to buy corn, said Yuan, manager of a grain drying operation in Heilongjiang, the country’s top corn producer, where supplies from the just-harvested new crop have begun to enter the market.
“Many people believe prices will rise further,” said Yuan, who was willing to be identified only by his surname due to the sensitivity of the matter.
Prices have also gained in other key corn hubs including Shandong, Hebei, and Henan provinces, analysts and traders said.
Purchase prices for the new crop are at least 30% higher than in recent years, according to farmer Song Yongquan, who manages a cooperative that grows around 1,000 mu (67 hectares, or 166 acres) of corn in Henan.
That’s after a temporary dip on prices in late September as the newly harvested corn supplies hit the market.
“The price already hit a low point when the new crop kicked in,” said Song, who finished harvesting about half a month ago.
“Prices will go up further, gradually,” Song said.
($1 = 6.7400 yuan)
(Reporting by Hallie Gu and Shivani Singh. Editing by Tom Hogue.)
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