January 7, 2004

 

 

Malaysia Buys Indian Corn Amid Uncertainty Over China Export Policy

 

Malaysia, Southeast Asia's biggest corn buyer, will import Indian corn for the first time in years amid uncertainty over China's export policy.

 

Regional grain traders said Malaysia, China's biggest corn customer after South Korea, had sealed contracts to buy about 75,000 tonnes of corn from India, which is offering corn after a long time.

 

The deals had been struck between $135 and $145 a tonne FOB, taking the landed cost to around $162 a tonne in Southeast Asia.

 

"Most of that is expected to arrive in Malaysia this month," said one regional trader.

 

A Kuala Lumpur-based trader added: "Yes, we have bought corn from India after a long time. We have to look at all possible origins as Chinese offers have dried up."

 

One trader said some Indian corn had already arrived in Malaysia.

 

"The Indians offered at $135 a tonne FOB levels in the beginning but they raised their prices after seeing good demand," said one trader.

 

Export Potential

 

Grain traders in India confirmed the sales and added the South Asian nation had the potential to export up to 500,000tonnes of corn this year. One trader said some Indian corn had also been sold to Indonesia and the Middle East.

 

"Indian prices are competitive now. Any flare up in domestic prices may hit exports," one Indian trader said.

                             

The South Asian nation normally harvests about 13 million tonnes of corn a year, but in 2003/04 (July-June), output is expected to rise to around 14 to 14.5 million tonnes.

 

This has helped domestic Indian prices to ease. Indian prices generally rise after February, with a gradual drop in local availability.

 

Singapore traders said South Korea was also keeping an eye on Indian corn, although the volumes India planned to offer might not be enough to meet South Korea's entire requirement.

 

"South Korea could buy a few cargoes if the Chinese uncertainty lingers for a few more weeks," said one trader.

 

A lack of Chinese offers has given India opportunity to push sales in the region. Traders said some buyers preferred Indian supplies over the United States as India had the ability to ship in small quantities.

 

Although official figures are not yet out, China's corn exports are expected to exceed a record 15 million tonnes in2003. But sales are expected to slow considerably in 2004 as the country struggles with eroding grain stocks.

 

Jiang Jianhua, vice-president of Jilin Grain Group, one of China's two authorised corn exporters, said this week that China had fulfilled commitments for 2003 and was keen to export more in 2004 after Beijing announced its new export policy.

 

Talks have also swirled in leading grain markets that China, the second-largest grain exporter last year, might have imported up to four cargoes of U.S. corn.