May 6, 2011

 

 

China Grains Reserve Corp (Sinograin), which manages China's central government reserves, confirmed that the company bought one million tonnes of US corn in March and said it had no imminent plan to import more.

 

Traders said Wednesday (May 4) that the company has started to load its first US corn cargo from a US port.

 

"We have no plan now to import more, further imports have to balance farmers' interests while curbing domestic grain price rises," said Cheng Bingzhou, the company's spokesman.

 

China's corn prices hit an all-time high in March. That, coupled with low state reserves, made it difficult for Beijing to cool food price rises, which have driven up the country's overall inflation rate to a 32-month high in March.

 

Cheng said cheap US corn prices at the time had prompted China to import, adding the purchase was not due to a shortage at home.

 

"China's corn market is basically balanced, there is no big deficit as people in the overseas markets are saying," said Cheng. He said Sinograin is still buying corn from Chinese farmers to replenish state reserves.

 

But tight US old crop supplies have driven up the Chicago front-month futures contract prices by more than 10% since March, making it expensive for China.

 

Traders said China was seeking other origins, including from Argentina. But Cheng said the company was not aware of any government plans to buy corn from Argentina. Argentina deputy agriculture minister said in April that Argentina hopes to work out a health protocol and export up to two million tonnes of corn to China this year.

 

"Argentina corn is also very expensive, and we don't think right now that China is willing to buy from Argentina," said one industry analyst.

 

Cheng said there had been no decision yet on the use of the imported corn, whether the corn will be stored at state warehouses or immediately released to the market after cargoes arrive in coming months.

 

Meanwhile, China Grain Reserves Corp has bought about 7-8 million tonnes of corn in major producing areas in China since it started earlier this year to replenish dwindling corn reserves, Cheng added.

 

The company's plan to buy 10 million tonnes of corn is proceeding "smoothly," as the government has raised the bid price, he said.