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China corn imports to hit 15-year peak
Published on: 2011-03-25
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China is set to import the largest amount of corn in more than 15 years, according to US government analysts in Beijing, injecting new demand into a tight global market.

The analysts project that China will import 2.5m tonnes of corn in the crop year that begins in September, making its third significant international purchase in three years.

If the projection is confirmed, the imports will be hitting the third-highest level in 50 years.

Corn futures have risen 13 per cent in the past week as rumours circulated that a trading house had sold millions of tonnes of US corn to China.

Export data released on Thursday did not confirm new sales, however.

Many analysts said China, whose middle class is consuming more meat, will need to turn to foreign corn suppliers to feed livestock. China is already the world’s largest importer of soyabeans, also an animal feed ingredient.

The US Grains Council, citing private forecasts, projected that China’s leftover corn stocks would cover only 15 per cent of domestic demand this year.

“China is going through a phase of incredible growth,” said Rebecca Bratter, director of trade development at the Grains Council, an export promotion group.

“It’s not surprising that, during this period of transition, we may see some changes to agricultural supply-and-demand equations and some new trade flows.”

Grain supplies are a sensitive topic in China, whose state grain companies denied there had been new purchases of corn in the past week. The US analysts in Beijing do not represent the official view of the US Department of Agriculture.

The department’s long-term forecast estimates that China will import 1.2m tonnes of corn in the coming year with levels steadily rising to 8m tonnes in a decade. More Chinese corn purchases, while small as a share of world trade, would come at a time when supplies are critically low in the US, the largest exporter.

Richard Feltes, vice-president at brokers RJ O’Brien in Chicago, said: “Quite frankly, the world does not have a lot of corn to give to China right now, even if they wanted it. That is why the market is so on edge.”

On the Chicago Board of Trade, corn futures for May delivery were at $6.95 per bushel on Thursday, up 2 per cent. Prices have gained 90 per cent in the past year.

China is the world’s second largest corn producer. The world’s most populous nation has turned to corn imports when international supplies are cheaper than domestic supplies, as happened when the country imported in bulk last year.

Currently, domestic prices are lower in China. If any purchases had been made, they would have been conducted by Sinograin, which stocks the state reserves.

The Beijing-based US analysts, led by Scott Sindelar, said imports will likely pick up after Chinese corn stocks have declined later in the year and international prices become more competitive.

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