China's corn futures are on track to rise almost 3 percent this month, on speculation that major corn-growing provinces in the world's top producer are preparing to buy grain in a bid to support farmers as demand is expected to drop, analysts said.
There has been discussion by market participants that regional units of state grains stockpiler Sinograin in China's north-east may buy as much as 10 million tonnes of corn after the week-long Chinese Lunar New Year holiday which starts on Friday, agriculture analysts Cherry Zhang at JCI and Meng Jinhui at COFCO futures said on Wednesday.
That would equate to about 5 percent of China's annual consumption of corn. Sinograin did not respond to requests for comment on the market discussion. It does not disclose details of its purchasing. If confirmed, any regional buying would run counter to Beijing's abandonment of its corn stockpiling programme last year that left farmers to rely on market demand for the first time in almost a decade.
Other measures from regional authorities have included subsidies to corn processors to stimulate consumption as the global market struggles with a vast glut after bumper crops in the United States. With only two sessions before the end of the month and the week-long Chinese New Year holiday, most-active May corn futures on the Dalian Commodity Exchange were on track for a 2.5 percent rise for January. Prices hit 1,582 yuan ($230.03) per tonne on Tuesday, their highest since December 6, extending their 6-percent run-up in 2016. On Wednesday, prices were down 0.8 percent at 1,557 yuan as some investors took profits.
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