China corn prices soar

China's domestic corn prices jumped this week due to a shortage in a northern province, while a container load of US grain is stranded in Hong Kong awaiting a Beijing import permit to be issued for its buyer.
Traders said Shandong, one of China's major corn growers and also the country's top corn starch producer, had run out of the grain stock, helping jerk up cash corn prices across the country following a one-week holiday last week.
In Jinan, the provincial capital of Shandong, corn prices stood at 1,320 yuan per tonne ($164.8) - a high not seen since October last year - up from 1,280 before the May Day holidays, due in part to logistics problems.
Traders said it was unclear if domestic corn prices would continue their uptrend. Soft hog and poultry prices were squeezing profit margins for the animal feed industry, which accounts for the majority of the country's corn consumption.
"It's unclear if corn prices are to rise further," a senior trader at a Chinese company said, adding that the prices in the consuming southern province of Guangdong had not recovered to the levels seen in February or March.
While planting in Jilin, the country's top corn producer in the north-east, had been delayed by one to two weeks due to cold and wet weather, the 2006 crop could still catch up with growth, depending on the sunshine in the next few weeks, the trader said.
The traders said 100 tonnes of US genetically modified corn was still in Hong Kong, triggering worries that Beijing was not yet ready to throw open the door for foreign corn.
On Monday, Shenzhen Hualian Grains and Oils Trading Co told Reuters it was still awaiting a permit from Beijing's quarantine authority (CIQ) to bring in the corn. It needed the approval in addition to a permit from Guangdong CIQ, it said.
The traders were watching the fate of the cargo, seen as a test case if Beijing allows corn imports in future as China will face a corn shortage possibly as early as next year.
A source close to the deal said: "They (the buyer) are still waiting. They're not certain about the government action."
Referring to Beijing's intervention, another senior trader at an international said: "It's an indication corn imports are still sensitive ... I think the government is not ready."