CCM: Market price of potato starch continues rising in Q2 2016

Publish time: 8th September, 2016      Source: CCM
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  In Q2 2016, the market price of potato starch rises steadily. According to CCM's price monitoring, the figure in May was:

  •     Top grade: USD986.09/t (RMB6,337/t), up 0.30% MoM but down 6.10% YoY   
  •     First grade: USD938.98/t (RMB6,062/t), up 0.23% MoM but down 9% YoY   


                                                   Monthly market price of potato starch in China, 2014-2016

                                                                                        Source: CCM

The rising market price of potato starch is mainly ascribed to following factors:

1. Increasing potato price

The extreme weather such as cold wave hit Northwest China in early-2016, seriously reducing the yield of potato in Q1. Meantime, as there are no new potatoes flowing into the market in April-May, the insufficient supply pulled up the price. According to CCM's research, the potato market price increased from USD267/t (RMB1,731/t) in Jan. to USD437/t (RMB2,565/t) in May.

2. Reducing inventory of potato starch

Data from CCM show that as of 26 May, the potato starch inventory amounted to about 108,000 tonnes in China, 70,000 tonnes lower than the 2016 end-of-quarter inventory, and 37,000 tonnes lower than the same period last year. Of this, The inventory consumption of potato starch hit the highest in Northwest China – 36,000 tonnes in March-May. Notably, the inventory remained relatively tight in Northeast China – only 6,000 tonnes in May.



                                               Inventories of potato starch in China, May 2015/ 2016, tonne





            May 2016           


            May 2015           


            Northwest China           






            Northeast China           






            North China           











                                                                                         Source: CCM


Notably, the rising price improves manufacturers' gross profit (=average ex-works price - purchase price of raw material / flour yield - processing expense). According to CCM's research, gross profit in May:


  •     North China: USD194/t (RMB1,250/t), the same as that in March   
  •     Northeast China: USD12/t (RMB75/t), USD7.70/t (RMB50/t) higher than March   
  •     Northwest China: USD139/t (RMB900/t), vs. USD108/t (RMB700/t) in March   

However, the rising potato starch price pares down its price advantage among other starches in China. The prices of cassava starch and corn starch all maintained low affected by the sliding prices of their raw materials. Specifically, the ex-works price of corn starch (northern) was USD342.92/t (RMB2,214/t) in May, down 29.50% YoY. And the market price of cassava starch even hit a record low to USD432.36/t (RMB2,792/t), down 19.95% MoM.


  The market price gap between potato starch (top grade) and cassava starch widened to USD100/t (RMB645.87/t), up 53.16% YoY, further reducing the price advantage of potato starch.

                       Monthly market price gap between potato starch (top grade) and cassava starch in China, 2015-2016


                                                                                         Source: CCM

At present, China's potato starch market enters the slack season. What's more, domestic manufacturers and major distributors are unwilling to purchase potato starch as they focus on consuming the existing inventories.

In regard to the raw material, new potatoes start to enter the market in Shandong Province. The increasing market supply stops the starch price from rising. In addition, the planting period of potato in some regions has come to an end. Influenced by the cancelation of the purchase policy of corn for temporary, farmers in Northeast China are likely to switch their fields from corn to potato. As a result, the potato planting area will increase by 30% in Northeast China this year.

To sum up, the price of potato starch may reduce in later period due to the sufficient raw material supply.


  This article comes from Corn Products China News 1606, CCM




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  Tag: potato starch