February 24, 2004

No Cheap China Corn On Export Resumption

Feedmillers looking to buy cheap China corn as an alternative to expensive US grain may end up with nothing at all.

After a long wait, China finally sealed its first corn sale to Japan with further deals in the pipeline as talks with South Korea progress, an industry source said on Monday.

China sold the corn to Japan at $175 a tonne, FOB, for March shipment, the industry source said. The source did not specify the volume of the shipment, saying only that it would be in small vessels.

Concerned about declining grain stocks, China, the world's number two corn exporter last year, is slashing exports this year, with only 1.4 million tonnes scheduled for the first half.

Confirming market talk, the source also said Beijing had scrapped all export subsidies except for a rebate of the 13-percent value added tax (VAT).

With U.S. corn seen as expensive at $200 per tonne, C&F Asia, or more, even for larger shipments, Asian corn buyers had hoped that they would be able to buy lower-priced grain from China.

But an official at Jilin Grain Group (JGG), one of the country's two authorised corn exporters, said last week its top destinations would be those, including Japan, willing to pay prices matching U.S. levels.

Asked whether China was also talking to Malaysia or Indonesia about corn exports, the source said: "No...It is too far."

Chinese corn exports surged by 40.4 percent last year to reach a record 16.39 million tonnes, with South Korea, the top buyer, taking as much as 8.04 million tonnes.