Investors are now tracking weather in China's corn growing regions and looking for news on further purchases while ahead-of-schedule plantings in the US are also weighing on prices.

 

"China's imports are going to be an issue and the volumes purchased will eventually depend on the plantings and production there this season," said Scott Briggs, an agricultural commodities strategist with ANZ Banking Group. He said corn futures currently seem to be overdone and there could be some sell-off over the next few days.

 

The July contract on the Chicago Board of Trade ended 5¼ cents or 1.4%, lower Thursday (May 13) at US$3.73 a bushel. Many traders said prices are unlikely to gain further and would have fallen below US$3.50/bushel by now but for the latest purchases by China.

 

According to Thomas C. Dorr, chief executive of US Grains Council, it may be possible that some 15 US cargoes totalling 825,000-900,000 tonnes have been sold to China.

 

US is projected to export close to 50 million tonnes worldwide in the current marketing year to August, and still be left with closing stocks of 44 million tonnes, according to estimates from the USDA.

 

The fact that China's imports in the next six months may reach 1.5 million tonnes has already been factored in by the market, which is now looking for fresh leads, said a Singapore-based commodities analyst. He said that China is currently not facing any dearth in supplies but is still importing the grain because local prices are high amid strong demand.

 

China's prices are currently US$7-8/bushel compared to US prices of around US$3.50/bushel. China's current corn imports are only a tiny part of global trade but that could change if the next crop size there is small, leading to a greater drawdown of stocks and increasing the need for imports. China's closing stocks are projected at 53 million tonnes, while its annual consumption is 155 million tonnes.

 

The country's corn output fell to 155 million tonnes in 2009-10 from 166 million tonnes a year earlier due to drought and there are worries that the ongoing delayed planting may affect the next crop as well.

 

Traders in Japan and South Korea, two of the world's largest importers, are disappointed that China's purchases have prevented a decline in global prices, which was expected due to the bumper crop in South America and excellent plantings in the US.

 

Buyers in Japan are looking to purchase around 2.7 million tonnes for July-September shipment to meet their food, feed and industrial requirements. Japan has secured barely a third of its corn import requirements for the next quarter. Japan is likely to import a total of 4.1 million tonnes in the July-September quarter, including around 3.0 million tonnes for feed use, traders said.