COFCO expects corn prices to drop steadily in the second half of the year

According to the China Commerce Federation’s Petroleum Distribution Committee, which recently stated that “fuel ethanol exacerbates food shortages and hopes the state will cancel subsidies,” China Agri-Industries Holdings Co., Ltd. (00606.HK) executives said yesterday that fuel ethanol has been recognized by the world and its national food security Does not constitute a threat. The increase in prices of some agricultural products since the first half of the year was mainly due to supply and demand, and it is expected that the price will drop steadily in the second half of the year.

At the interim results meeting held yesterday, Li Bei, executive deputy general manager of the China Grains, Oils, Biofuels and Biochemical Department, interviewed by this reporter, pointed out that the development mode of fuel ethanol as an alternative energy source has been recognized in the world and its energy. The input-output ratio (corn is 1.6 and cassava 2.3-2.8) proves that fuel ethanol is an effective alternative energy source.

According to Li Bei, the private oil companies have been informed of the letter, and the National Development and Reform Commission did come to the company to investigate, but from the current situation, China's fuel ethanol market is still relatively stable.

In view of public opinion's attribution of corn prices to fuel ethanol, another top grain and oil company in China pointed out that the price increase of corn mainly stems from the lack of production in the northeast, followed by the state's northern grain transfer, which brings some speculative opportunities to dealers. “The current price is falling steadily and it is expected to return to normal in the second half of the year,” said the top official.

Lu Jun, the deputy general manager of China's grain and oil, further stated that “the main reason for the increase in agricultural product prices is the change in supply and demand. Too high prices will guide farmers to increase planting, which in turn will lead to a drop in prices.”