Jan. 8, 2007 (China Knowledge) – Fufeng Group, China's largest glutamic acid producer, is confident that its profit margins can be maintained, even with rising corn prices, which account for 50% of its production costs.

Chairman Li Xuechun told the South China Morning Post on Monday that prices of its products have room to rise, thereby covering production costs. Li forecast a “modest” rise in glutamic acid prices, which recently ranged from RMB 7,000 to RMB 8,000 per ton. However, Li predicted that corn prices would probably decline after the Lunar New Year next month as most corn purchasers had already stopped placing orders. And as corn is a perishable crop, farmers cannot keep their corn indefinitely, said Li.

Corn prices in China recently rose to RMB 1,500 per ton, its highest since 2004. Fufeng Group announced a net profit of RMB 237 million for the fiscal 2006 on turnover of RMB 1.2 billion. Glutamic acid accounted for 58% of turnover. The group's annual glutamic acid production capacity now stands at 280,000 ton following the opening last month of the first phase of its production plant in Hohhot, Inner Mongolia. Fufeng also produces other food ingredients like monosodium glutamate and xanthan, as well as fertilizers and starch sweeteners.