China's corn imports depend on weather and domestic prices

The chance of China importing more corn in coming months depends largely on whether Beijing can tame domestic prices and if bad weather threatens the new harvest, according to Chinese market participants.

China's state grain trader COFCO Co. Ltd ignited grain market speculation last week by buying six cargoes of US corn, the biggest such purchase since 2001. But Chinese grains traders and analysts said the country's supply and demand is basically balanced and COFCO's large buy was designed to provide some short-term relief for Chinese prices.

The key factor in the question of further imports is the trend of domestic corn prices, said a senior trading manager with COFCO.

COFCO's purchase aimed to help feedmills ensure supplies, supporting government efforts to cool rising domestic prices, which could push up feed prices and cause wider inflation.

"If prices stop rising, there may be no need for more imports," said the executive, who wanted to remain anonymous because of the sensitivity of the situation. "We don't think there is a big shortage at home."

Unlike soy, China's corn inventories should be enough to cover domestic demand, traders said, provided middlemen do not hoard it on the pretext of possible shortages from lower harvests.

Despite the planting delays, if there was enough sun during the growing period, the harvest might not shrink, according to agriculture experts.

"If the weather later is normal, prices may fall, which will reduce the prospect for more imports," said the trading manager.

To curb price rises, Beijing has already banned bidding by trading companies and corn processors at weekly government corn auctions to ensure enough supplies for feedmills.