China may drop 10 million-tonne corn buy plan on high prices

Despite market rumours that China may buy more corn from producing areas in the east, up to a total of 10 million tonnes, analysts said Monday (February 16) rising corn prices would reduce the likelihood of any such plan being implemented.

The government has been mulling the purchase for some time. But if it doesn't start buying local corn by mid-March, it is unlikely to do so during the rest of the 2008-09 crop year - which ends in September - because there wouldn't be much corn left in the market, said an analyst with Shanghai JCI, a commodities consultancy firm.

The rumoured purchase quantity is 8 million tonnes to 10 million tonnes, but analysts said even 8 million tonnes would be a big volume.

The government has been buying corn from the northeast producing areas since the bumper harvest in the current crop year, as part of a target of 30 million tonnes.

Corn output in Henan, Hebei and Shandong provinces, the biggest producing areas in east China, reached more than 40 million tonnes, according to Chicorn Network estimates.

"The government is waiting (to see if it's still a good time to purchase more corn) as corn prices have started to rise after the Lunar New Year holiday," said an analyst with the network.