In fact, Argentina mainly plants GM (Genetically Modified) corn. However, some GM corn is not permitted to be exported into China, so the Chinese government was cautious about importing Argentinean corn. In 2012, although China signed a plant quarantine agreement with Argentina in April, China didn't import any Argentinean corn until Dec. when it finally imported just 48.1 tonnes of corn from Argentine, according to data from China Customs.
However, the peak season of the domestic aquaculture industry would not really come in June. Thus, the demand for corn germ meal would not increase significantly in late June. In addition, some traders have a certain amount of inventory, which also reduces their demand for the product in a short term. In view of these factors, it's estimated that the price of corn germ meal will not continue to increase sharply at the end of June and early July but still maintain at a high level. But if the supply of the product is still tight in July, it's estimated that the price of the product will probably keep on increasing along with the growing demand for the product.
Generally, there are three main reasons that led to the increasing price of corn germ meal in China in the recent months of 2013.
Firstly, the price of corn germ maintained high during the period because of the limited production volume of the product resulted from a low operating rate of relevant producers in the domestic market. For instance, the market price of the product (oil content 40%) in China was around USD647/t in April.
Secondly, the production of corn germ meal decreased during recent months. According to CCM, the domestic ex-works price of corn oil has begun to decrease since Feb. 2013. In June 2013, it even declined to USD1,469/t. With the decreasing price, most plants suspended production in order to avoid loss. As a result, the production of corn germ meal, a byproduct during the production of corn oil, also decreased. Subsequently, corn germ meal prices went up due to the insufficient supply.
Thirdly, after the Chinese Dragon Boat Festival (June 10–12), the downstream demand for corn germ meal increased. With summer came, the domestic aquaculture industry began to boom, increasing the demand for corn products used as feeds or feed additives.
Corn Products China News is a monthly publication released by CCM. It offers timely update and closes follow-up of China’s corn market dynamics, and analyzes the corn market data and corn industry trends. Major columns of this newsletter include the latest information on newly updated price fluctuation, latest market trends and intelligence, new legislations and policies, new technologies, new area dynamics and new corn supply that are shaping the market.
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