January 28, 2008

China to supply Taiwan with corn despite tight domestic supply

China may likely export corn to Taiwan amidst limited supply in the domestic market as a gesture of goodwill.

Tensions between China and Taiwan eased after the island's main opposition Nationalist Party or Kuomintang (KMT), which is against Taiwan independence, won in parliamentary elections in January.

Chinese officials said that although the country is currently discouraging export, Taiwan is an exception.

However, due to tight supply in the mainland, exporters could only give modest amount of corn. Beijing estimates exports between 200,000 to 500,000 tonnes to Taiwan in the first quarter of the year.

A major exporter said that his firm has not signed any contract though, as a final decision is pending approval from the State Council.

Taiwan asked for 1 million tonnes of corn from China, after the island accepted imports from the mainland in October 2007, to ease the impact of high US prices and tight supply on the island's livestock breeders.

The landed cost of Chinese corn is 20 percent cheaper than the US corn, when accounting for freight.

Taiwan, which has been considered a rebel province by China, bans corn imports and other food products from the mainland. However, it has occasionally allowed corn exports to come.