Corn prices stabilised at weekly auctions of from Chinese state stockpiles.
After two weeks of decline, the average price paid for the corn - mainly of 2015 origin, but with some from 2014 - held this Thursday at 1,959 yuan a tonne.
As to whether this halt represents a pause in a declining trend, or a recovery in values, bulls have two factors in their favour.
One is some renewed firmness in corn futures on the Dalian exchange, where spot September contract ending at 2,257 yuan a tonne on Thursday, up 1.9% week on week.
The best traded January lot settled at 2,305 yuan a tonne, a fresh contract closing high, and up 3.5% week on week.
And then there is the talk of supplies for sale at the auctions running low.
“Rumours abound that their temporary reserve, from which their weekly auctions have been taking place, has just 9m tonnes left in it,” said Sean Lusk at Walsh Trading.
With 4m tonnes sold at the auctions per week, “that would mean that the temporary reserve corn would be all but gone after next week’s auction, shifting the source to the national reserve, which is believed to have 10m tonnes in it.
“That would buy another 2 to 3 weeks of supply, before China would have to tap into its permanent reserve.”
And - if all this thinking is correct - to avoid the permanent reserve running down too, China’s “choice then would be to ramp up imports significantly” to rotate supplies, “or to let the market develop freely to ration demand to fit existing supplies”, implying higher prices.
The market may indeed prove the best gauge of how close to the mark the rumours are.
|Results of weekly auctions of corn from Chinese state stockpiles
|Date of auction||Crop on offer (tonnes)
||Proportion of crop on offer sold||Price per tonne (yuan)