Corn prices in China are expected to continue growth in 2007 in line with international counterparts on the back of strong demand and fresh fund flows, China's Ministry of Agriculture (MOA) forecasts.
International corn prices will very likely strengthen again in the 2006 and 2007 season as a result of lower global inventories and mounting fresh demand from bio-fuel production, MOA said.
In addition, large amount of new capital might continue flowing into the global corn futures market, helping boost corn futures prices as well as spot corn prices.
With China entering the WTO and domestic market increasingly connected with international counterparts, corn prices in China are very likely to go up as well in 2007, MOA explained.
Xu Yulan, a corn analyst with Zhonghui Futures, said MOA's forecast served as an indicator for the ideal corn prices in 2007 in the eye of the central government.
"What the government wants most is letting corn prices stay at high levels this year to protect the interest of Chinese corn farmers." Xu said. "But it [the government] does not want the prices to go up too sharply for fears of inflation pressure." The government is very likely to achieve the goal on corn prices this year by launching controlling policies accordingly, the analyst suggested.
China's corn market will witness a tight balance in the 2006 and 2007 season with domestic output reaching 142 million tons, MOA said in its latest forecast. Demand for corn from industrial feedstock is expected to grow by 13.5 percent on an annual basis to as many as 32 million tons in this season.China Business News On-Line
