2011 Annual Review of Corn Product Industry

China's corn product industry not only faced great challenges but also enjoyed great opportunities in 2011, against the background of the high cost of raw materials, domestic inflation, government's strict supervision or even restriction, as well as some booming downstream markets. Affected by these factors, some corn product producers have to restrain their production or even shut down their plants, but others manage to win great profit in 2011, according to CCM’s December issue of Corn Products China News.

Corn, as the most important raw material of corn products, always attracts abundant attention. And corn price had run an uptrend in general from Jan. to Sept. 2011 majorly because of its insufficient supply. But the newly harvested corn this year, whose output is estimated to reach 184.5 million tonnes, up 4.1% over that in 2010, has turned the price to head down since Oct. 2011. Overall, the average domestic market price of corn increased by 18.6% to USD363/t in Dec. 2011 compared with that in Jan. 2011, partly caused by which, corn products' average prices also rose by 8% during the same period.

Besides, the generally sound local economic environment and stable development of food, beverage and feed industries also support the price increase of corn products. In detail, China achieved 9.7%, 9.5% and 9.1% of annual growth rate of GDP in Q1, Q2, and Q3 2011 respectively, and it's expected that the annual growth rate of GDP can average at 9.2% and 8.9% for the whole year of 2011 and 2012 respectively (it was 10.3% in 2010) according to Chinese Academy of Social Sciences. In addition, the averaged 5.5% CPI and 6.4% PPI during Jan. and Nov. signifies that "inflation" is the major word to describe China's macro economic performance in 2011. Moreover, in accordance with the National Bureau of Statistics of China, the output of food industry and beverage industry during the first ten months this year increased by 16.8% and 18.7% respectively compared with those in the same period of 2010; in light with the Ministry of Agriculture of China, feed's output is predicted to reach 169 million tonnes in the whole year of 2011, up 4% over that in 2010.

By dint of the above general economic environment and some promising market situations, a few corn products have enjoyed fast development in 2011, such as starch sugar, especially HFCS (high fructose corn syrup), some amino acids, like lysine. Take HFCS as an example, due to the insufficient supply of sucrose and its high price in 2011, HFCS' demand and price have enjoyed obvious increase, attracting lots of producers to enter into this industry or expand the production of HFCS, whose capacity all over the country reaches about 3 million t/a in 2011, up 38.9% over that in 2010.

However, some corn products have suffered bad market situation in 2011, like vitamin c (VC). Owing to VC's terrible oversupply, domestic and export prices of VC have maintained a low level in 2011, resulting in great loss of VC producers. And insiders are looking forward to the launch of encouraging governmental policies to turn around the stagnant market, like a new VC entrance threshold.

As for governmental policies, corn deep-processing industry has been restricted to some extent in 2011, and the following are highlights.

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As for the forecast in 2012, policies, market and industry environment make 2012 a key year for corn product's development. With the expected growth of China's economy in 2012, domestic corn product industry will still boom, but production costs will remain a problem, whilst corn price will still run at a high level due to the tight relationship between corn's supply and demand, even though corn's output enjoyed a bumper harvest in 2011. Besides, governmental restrictions will be still the leading factor to affect the industry, while it's a great opportunity for large enterprises to develop further by merging small ones.

Source: Corn Product China News 1112

http://www.cnchemicals.com/Newsletter/NewsletterDetail_6.html

Content of Corn Products China News 1112:

VC's demand structure should be changed in the future

Chinese corn products Imp. & Exp. analysis in October 2011

Lysine price in China maintains downtrend in Dec. 2011

Corn starch price in China still maintains downtrend in Dec. 2011

New policies to restrict development of fuel ethanol using grain as feedstock in China

New guide about domestic high technology industry with priority to develop forwarded

Chinese government strengthens support for small and micro enterprises

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Corn Products China News, a monthly publication issued by CCM International on 20^th of every month, reveals the driving force of news stories and deeply analyzes the influence of trends and dynamics on domestic and international corn deep processing industry.

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Source: http://www.cnchemicals.com/PressRoom/PressRoomDetail_w_911.html