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China corn prices rise as bad weather delays crop shipments

BEIJING/SINGAPORE, Nov 12 (Reuters) - Corn prices in China have pushed to multi-month highs despite the advancing harvest after wet weather slowed crop collection just as record energy prices pushed up grain drying and logistics costs, analysts and traders said.

New crop corn futures on the Dalian Commodity Exchange have rallied nearly 9% in the past month to their highest since June, while key cash markets in the east JCI-CORN-QNDAO and south JCI-CORN-SHZH of the world's second-largest corn consumer have climbed sharply in recent days.

“Rains and snow delayed sales of the new crop to market in Liaoning (province), the northwestern and northern regions, while logistics at ports in Liaoning were suspended due to the bad weather,” said Meng Jinhui, senior analyst with Shengda Futures.

Liaoning produces 7% of China’s corn and is home to ports that distribute the grain from other northeastern provinces, including Heilongjiang, the biggest producing province.

Cash corn in the key grain consumption hub of Shandong Province in eastern China jumped to 2,890 yuan ($451.81) a tonne this week from less than 2,650 yuan at the start of the month, after snowstorms hit northern and northeastern China snarling crop shipments.

“Farmers have the habit of drying grain on the fields and selling it to traders right after harvest, when the weather is good. But the rains and snow have disrupted the habit,” said Li Hongchao, analyst with Myagric.com.

“Once they harvest the grain and store it, they would not rush, and tend to wait for prices to rise further,” Li said.

In northern and northeastern China, around 12% of the corn crop has already been sold to the market on average so far, compared with 14% at same time last year, according to a survey done by Myagric.com.

“Farmers are holding back on sales, while corn is not coming out of the northeast fast,” said a purchase manager with a feed producer in northern China.

Corn prices are also supported by the rising costs of harvesting and drying the new crop, the country’s agriculture ministry said in its monthly crop report this week.

China’s grain drying towers are mainly coal fuelled. Some of the facilities have shut in recent weeks because of record coal prices and to comply with government orders to reduce consumption.

Higher fuel prices also lifted transportation costs.

“The railways, and buses were all mobilized to mainly transport coal. Diesel supplies were so tight that bus transportation in some places was paralysed,” said a grains trader with an international trading house.

Prices of wheat, a substitute for corn in feed rations, have also climbed on strong demand from milling plants and the livestock sector.

Planting of the new winter wheat crop was delayed in major production regions because of constant rains, stoking worries over output of the staple grain in the world’s most populous country.

Cash wheat prices in Shandong province are up 10% since early September. JCI-WHT-JINN ($1 = 6.3965 Chinese yuan renminbi)

Reporting by Hallie Gu in Beijing and Gavin Maguire in Singapore; Editing by Christian Schmollinger

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