May 25 (Bloomberg) -- China, the second-largest corn consumer, has booked almost 1 million metric tons of imports from the U.S. and will probably buy more, the U.S. Grains Council said. That would be the biggest purchase in 14 years.
The U.S. can double or triple sales to China, depending on their requirements, as the fastest-growing major economy uses imports to “complement” domestic supply and satisfy expanding demand, Alvaro Cordero, manager of international operations- marketing at the U.S. Grains Council, said in an interview in Tokyo yesterday.
China purchased about 600,000 tons of U.S. corn in the past month, according to the U.S. Department of Agriculture. The country is securing imports and selling from state inventories to cool domestic prices that have rallied 11 percent in the past six months to near record levels. A reduced crop last year and planting delays have increased speculation of a supply shortage.
The country “may import about three million tons this year,” Ruan Wei, senior researcher at the Norinchukin Research Institute Co. in Tokyo, said by phone today. “China no longer sticks to 100 percent self-sufficiency in corn.”
The nation may have bought as many as 15 cargoes, or about 850,000 tons, after drought curbed the crop and as economic growth increased demand, Thomas Dorr, president of the grains council, said on the organization’s website this month.
“As their economy grows, we foresee China will import consistently,” Cordero said yesterday. “It needs to rely not only on its own production but also on alternative resources.”
Price Gap
The price differential between Chinese and world markets may expand, spurring more purchases, as futures in Chicago will be capped by a global surplus, concern over Europe’s sovereign debt crisis and low crude oil prices, he said.
China bought 118,000 tons of corn for delivery before Aug. 31, the USDA said May 21. That followed 369,000 tons of U.S. sales announced May 13 and 115,000 tons reported April 28. Exporters in the U.S., the largest grower and exporter, are required to disclose export sales that exceed 100,000 tons of any one commodity in a single day.
Should all these sales be delivered, Chinese imports would be the biggest since 1995-1996 when shipments totaled 1.48 million tons, according to USDA figures. Cordero said he was “confident” that China won’t cancel purchases as the economy is now more “market-driven.”
Stockpile Sales
China has pledged to use its stockpiles to curb domestic prices. The country has “more than enough” corn to meet demand, with just a third of inventories ample to cover current consumption, said Zeng Liying, deputy director of the State Administration of Grain, yesterday. Prices have been driven by market speculation and do not reflect fundamental supply and demand, said Zeng, who spoke at a conference in Beijing.
Corn for September delivery on the Dalian Commodity Exchange advanced to 1,984 yuan ($291) a ton yesterday, the highest price for the most active contract in two years. The price fell 0.7 percent today to 1,956 yuan a ton. The most active contract reached a record 1,990 yuan on May 12, 2008.
Corn for July delivery lost 1.4 percent to $3.66 a bushel on the Chicago Board of Trade at 3:33 p.m. Singapore time today. The commodity fell to $3.535 on May 19, the lowest level for most-active contract since April 27.
