February 12, 2009
High domestic prices, not drought may force China to purchase corn
China may import small amounts of corn this year if Beijing keeps domestic prices higher than global rates, but there is little danger of the current drought triggering a buying spree by the nation.
The major drought now affecting the country's main wheat areas should have almost no impact on sowing the next corn crop in two months' time as the most important areas are enjoying moist conditions after winter snows.
China, once a key corn supplier to Asian countries, reduced its exports last year, fearing that surging world prices could threaten its own supplies and drain its reserves.
However, after last year's record harvest, the Chinese government has purchased corn to support farm incomes and boost state reserves. It plans to buy 30 million tonnes of corn, about 18 percent of last year's record harvest, before the end of April.
Any potential increase from last year's 49,173 tonnes of imports would make 2009 the biggest year for Chinese corn imports since 2000.
China remained a key corn exporter in 2008, although Beijing limited exports in the first half of the year to stop the relatively high foreign prices from encouraging large exports from China and threatening the country's own supply.
The high cost of shipping corn from the United States, the world's largest corn exporter, means the opportunity to buy US corn and sell in China is not yet available.
Furthermore, US corn at a mere 4,871 tonnes of which were imported by China last year is hard to ship to China because of the country's controls on genetically modified organisms (GMOs).
