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March 8, 2012

 

China denies huge US corn buys
 

 

China has denied rumours of surging corn imports, which boosted Chicago corn prices to a five-month high, adding that the grain was "not an agriculture product that China is short of".

 

Nie Zhenbang, the director of the State Grain Administration, which oversees China's crop storage and distribution, said that the country had "stockpiled enough corn".

 

"We will not import corn in large volumes," he said.

 

Beijing estimates China's 2011 harvest at a record 191.8 million tonnes, of which more looks set to come onto the market as farmers sell crop to raise cash for this year's sowings.

 

The comments echo those on Sunday of Ning Gaoning, the chairman of Cofco, the state-owned grains trader, who said that China's corn imports would hold steady, or even fall, this year, thanks to the strong harvest.

 

China's corn imports hit 1.75 million tonnes last year and started strongly in 2012 too, soaring 32% month on month to 751,000 tonnes in January.

 

Indeed, Mr Nie's assurances contrast with a plea from Liu Yonghao, the founder of New Hope, China's top corn consumer, for a liberalisation of import restrictions to allow buyers easier access to the grain.

 

Chicago rumour has said that China is on the prowl for further corn supplies to meet consumption spurred by a rising pig herd, as the country attempts to meet booming pork demand.

 

Jon Michalscheck at US broker Benson Quinn Commodities clocking speculation "that China could enter the global market at any time to purchase additional corn tonnage", a factor which had supported Chicago futures prices on Monday.

 

He added: "It's difficult to read the Chinese government as to how determined they will be in its attempt to get their domestic corn prices under control, which could lead to the market chasing rumours and 'what if' scenarios throughout the crop year and well into next."

 

In Singapore, Phillip Futures analyst Lynette Tan said that "in the long term, China's corn will be in tight supply as domestic consumption is increasing rapidly".

 

The USDA last month hiked its forecasts for China's corn imports, upgrading them to 18 million tonnes in a decade's time, six times higher than those forecast for 2011-12 and enough to rank the country as the top buyer.

 

China has been seen as a likely buyer when US prices fall below US$6 a bushel, although a rally since mid-January has taken that level off the agenda for now for old crop supplies.

 

Chicago's expiring March lot hit US$6.71 a bushel on Monday (Mar 5), the highest for a spot contract since September.

 

"For the moment, the market seems to be attempting to slow down old crop corn demand until such time that it can get a better handle on what type of supply base the world will be looking at for 2013," Michalscheck said.

 

The March contract stood at US$6.60 a bushel at 13:00 GMT, down 0.9% on the day. The better-traded May lot was 1.1% lower at US$6.53 a bushel.

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