China buys more US corn to curb prices

 

 

China has struck deals to import more corn cargoes from the US to cushion the impact of a poor harvest on feed costs and inflation, weeks after it sealed its first import deal in four years.

 

COFCO Ltd., a state-owned company, bought 300,000 tonnes of US corn for shipment from June to September, a trader said, confirming weeks of market gossip that China was about to revert to importing in earnest. China bought 115,000 tonnes for delivery in the year ending August 31, the USDA said April 28.

 

China, the world's fastest growing major economy, is boosting imports as domestic futures advance to the highest level in almost two years due to lower output and planting delays. Sales of close to three million tonnes from stockpiles since April 13 have failed to curb prices. Chicago futures gained 1.5% earlier to the highest level in two months.

 

Analysts said the country's imports may climb to 1.5 million tonnes this year, and purchases may increase in the next three to five years, resembling the gain in soy shipments in recent years. China is the world's biggest buyer of the oilseed.

 

Prices in bellwether Shandong province have surged as much RMB100 to a record RMB2,050 (US$300) a ton this month, the China National Grain and Oils Information Center said. The most active futures contract in Dalian is up 4% this year, touching RMB1,950 on May 10.

 

China may buy as much as 500,000 tonnes this year, Jay O'Neil, a consultant to the US Grains Council, said April 29. The last time the country was a net importer was 14 years ago when drought cut crops. China imported 1.48 million tonnes in the year ended September 30, 1996, down from 4.29 million the year before.

 

Analysts are expecting some corn supply shortages to appear at ports between July and September.

 

The harvest plunged by 13% to a four-year low last year due to drought, according to a survey published in November. Production dropped to 144.4 million tonnes from 165.9 million tonnes, based on reports. The USDA estimates production at 155 million tonnes.

 

Meanwhile, cold and rain delayed planting this year, increasing speculation supplies may fall short of demand. Rain and stormy weather reduced planting by two weeks in Heilongjiang province, the biggest supplier, according to reports. Planting around the country is affected, the Ministry of Agriculture said.

 

Corn for September delivery on the Dalian Commodity Exchange gained 0.3% to RMB1,941 a tonne earlier, after climbing to RMB1,950 on May 10, the highest level since at least July 2008. The most active contract has surged 11% in the past six months. July-delivery corn in Chicago advanced to US$3.8250 a bushel. The most active contract has dropped 2.3% in the past six months.