China's private companies seek to import more corn

Private companies in China are seeking more quotas from the government to import corn in a bid to cool down local prices, according to trading executives.

 

China's state-run Cofco Ltd. has already contracted imports of eight cargoes of corn totalling around 500,000 tonnes. Traders said total purchases contracted including private imports have increased to at least 17 cargoes.

 

"At least three more companies are applying for permits from the government and more such applications may be in the offing," said an executive familiar with the developments. He said companies that plan to import corn include New Hope Group, Shandong Weifang Yingxuan and China C&D.

 

The executive did not confirm whether the applications have been cleared by the government. Private companies which have already contracted imports of corn include Shandong Liuhe and Guangdong Haid, traders said.

 

In China, government allocates quotas to companies planning to import corn. China is importing US corn for the first time in many years and the government is auctioning local reserves to cool down local prices.

 

Traders said despite government auction to sell some of its reserves, prices have failed to move south. China is one of the world's largest consumer of pork and corn is mainly used to make animal feed.

 

Feedmillers snapped up almost 800,000 tonnes of corn, which government offered in Tuesday's (May 18) auction in the north-east at prices above US$255/tonne but much lower than the market prices.

 

Imports are taking place at prices between US$230-US$240/tonne. It is now cheaper to import corn in Southern China than move large volumes of domestic corn from the northern parts of the country, as is the usual trend every year.

 

"The imports so far have been miniscule and it will take another two months before they are available to the feedmills," said a Singapore-based commodities analyst. He said uncertainty over the size of the next crop is adding to the anxiety of the feedmillers.

 

China'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 recent bad weather may affect the next crop as well.