Sugar, corn drop despite state purchase

(Xinhua)
Updated: 2009-01-08 00:13

BEIJING - Most commodities in China maintained an upward trend on Wednesday but sugar and corn futures fell after rebounds due to state purchase plans.

Sugar contracts for May delivery closed 17 yuan lower to 2,903 yuan (US$427) a tonne on the Zhengzhou Commodity Exchange. The price slid even though sugar contracts in the US market rose to a two-month high on Tuesday.

China announced on Sunday a plan to buy 800,000 tons of sugar to protect farmers and sugar makers from price downturns which they had been experiencing since November.

That move, which will start on Friday, drove May sugar contracts up 34 yuan from 2,886 yuan on Tuesday.

Before the rebound, the price had been sliding for seven consecutive days. The decline was caused by an excessive sugar supply on the futures market.

State purchases only delayed the oversupply pressure temporarily but failed to solve the problem of overcapacity, said analysts. They suggested reducing the planting area for sugar yielding crops such as sugarcane and beets.

On Wednesday, corn contracts for May delivery on the Dalian Commodity Exchange closed 19 yuan lower at 1,529 yuan a tonne. That followed a 13-yuan dip on Tuesday.

A 20-million-ton purchase plan by the government kept corn prices growing for about three weeks consecutively before Tuesday.

Investors feared weaker demand for corn, which can be used as poultry feedstuff, after China reported a 19-year-old woman died of bird flu in Beijing on Tuesday.

Driven by soaring metal prices in the London market, copper, zinc and aluminium on the Shanghai Futures Exchange increased for a third day.

Copper rose by a daily upper limit, while zinc and aluminium closed flat and up 1.04 percent respectively.

Gold for June delivery rose 2.09 yuan to settle at 187.63 yuan a lot (five tonnes).

Palm oil, soybean oil and rapeseed oil all closed higher for a third consecutive day.