March 13, 2013
China acquires more US corn
China has increased acquisitions of US corn crop due for harvest in September 2013 as the country''s overall orders reach about 600,000 tonnes since February this year.
Private animal feed mills, which had already bought 240,000 tonnes in late February, purchased the additional cargoes in response to relatively high domestic prices in China, the world''s second-largest cornconsumer.
Traders said large buyers, such as state-owned COFCO, are holding back from large purchases as they anticipate a further drop of US corn prices, while Sinograin, the manager of China''s state reserves, may also turn to the US after its domestic restocking programme ends on April 30.
Sinograin is currently buying from the domestic market only. However, it bought more than six million tonnes of US corn in late 2011 and early 2012 to replenish low state reserves.
The Chicago Board of Trade''s December corn futures contract , which tracks the crop harvested this fall, lost 7.1% over the first two months of 2013, in the second worst winter performance for the new crop contract in a decade.
Howver, the declines have failed to dent growers'' enthusiasm for planting the feed grain this spring, according to farmers in the US, the world''s largest corn exporter.
Sinograin has not been restocking at full tilt because domestic prices are hovering above government-set stockpile prices, company president, Bao Kexin, told reporters last week, on the sidelines of the annual parliament session.
The stockpile plan will end on April 30.
Bao declined to say whether the company would continue to import corn this year, adding that such decisions require government approval. State stockpiles are higher now than last year.
US pre-tax corn prices were about 23% below domestic rates in the port city of Shenzhen. Even with import and value-added taxes included, the US new corn price is about 14% lower.
New Hope Group, China''s largest producer of animal feed, urged Beijing to issue more corn import quotas to benefit pig breeders and meet rising demand for animal protein as more people move to urban centres.
China, the world''s largest soy importer, buys about 60% of globally traded soy.
Traders do not expect Beijing to lift corn quota curbs soon, but the government may be willing to issue more quotas to state-owned firms under its World Trade Organisation obligations.
China sets its annual corn import quota at 7.2 million tonnes, 60% of which is allocated to state firms. Although China imported a record of 5.2 million tonnes of corn in 2012, imports remain only a small part of the total, amounting to about two weeks of domestic consumption.