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China New Borun Corporation (BORN) Skyrockets, Alerting NYSE

  +Follow October 15, 2013 10:31AM
Tickers Mentioned:

The Chinese distiller China New Borun Corporation (BORN) saw its shares spike On Oct 14 as US corn exports to China continue to increase substantially. The rise was so precipitous, however, that it caused the New York Stock Exchange to contact the company over the "unsual activity."

Some rise in share price was expected. A few days prior, a private Chinese trading firm bought 420,000 tons of corn for delivery next year to take advantage of cheap prices, leading to speculation the corn processing industry in China will ramp up considerably as the country eases restrictions on corn importation.

The increased corn supply is great news for China New Borun. The company produces lower grade edible corn alcohol that is used to make cleaning solvents, crude corn oil, and the popular alcoholic drink baijiu. China New Borun currently has two manufacturing facilities, one in Shangdong province and another in Heilongjiang province that are jointly capable of producing 160,000 tons of corn-based edible alcohol per annum.

China has been loosening its restrictions on corn importation all year to cover supply shortages, as the country has already used up their domestic supply. The Financial Times reported in September that corn imports into the country were expected to increase from 3 million tons in the 2012-13 crop year to 7 million tons in 2013-14. The price drop in corn was fortuitous for the country, and they are currently taking advantage by amping up importation even more.

China New Borun had been down this year on less than stellar earnings. However, the increased importation of corn into China will almost certainly lower the company’s bottom line. The price of corn in China has been dropping steadily, from 2,346 yuan in July, to 2,272 yuan on Oct. 16, or $363.50 US a ton (around $9.10 a bushel.) Corn is currently $4.40 a bushel in the US.

While the Chinese government strives to maintain “self-sufficiency” with their crops and avoid excessive importation it has become clear the private traders have other ideas, and companies like China New Borun reap the benefits of the sudden influx of cheap US crops that will substantially lower costs going forward.

However, the sudden jump may have more to go on than just favorable crop conditions. Following the spike in price the NYSE contacted China New Borun, as is standard when a company’s shares elevate so suddenly. China New Borun, citing company practices, declined to comment on the unusual activity.

China New Borun is up 46.72 percent to hit $2.01 a share.   

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Results for BORN
29 Nov 15 08:33:07
$SALE breakout on #BlackFriday up 5% target $15. 6 EV/EBITDA, $60M stock buyback plan in Q4 https://t.co/qM8kTQpx0i $BORN $MARK $QKLS
28 Nov 15 00:58:31
次の @YouTube 動画を高く評価しました: https://t.co/3rFORCk6MR [COD BO3]Montage part 1 $Born to be$
27 Nov 15 04:05:26
I am bearish on $BORN with a target price of $1.15 in 1 mo. on Vetr! https://t.co/MgAG0pfSJv
26 Nov 15 22:51:33
XIT.TO iShares CDN S&P/TSX Capped Information Technology Index Fund Open https://t.co/3O8ASCXDb5 $XIT.TO $BORN $D/UN.TO $FTS.TO #XIT.TO…
26 Nov 15 22:51:33
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EBAY eBay, Inc. Volume https://t.co/MZmxHHd47V $EBAY $GREK $BORN $RY.TO #EBAY #nasdaq #nasdaq
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26 Nov 15 22:37:05
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Syed Waqas Nabi
24 Nov 15 08:00:23
A bullish Big MAC (Bullish) has occurred at 9:45 AM Nov 24 at $1.23 on China New Borun ADR Rep 1 Ord Shs (BORN) $BORN
23 Nov 15 10:54:59
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  +Follow October 15, 2013 10:31AM



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