May 22, 2007

CBOT corn prices rise on news that China may be cutting corn exports

Rumours that China may be cutting its corn exports to feed its growing animal production industry has sent CBOT corn prices rising.

China's exports may fall 60 percent from current levels next year, while imports may rise fivefold, Wang Xiaohui, a director at China National Grain and Oils Information Center, said in Beijing.

News of China turning into a net corn importer has been making its way around the market, even though figures from China Customs show current corn import levels at far smaller levels than exports. 

China's corn exports rose to 3.5 million tonnes in the first four months of the year, compared with 2.2 million tonnes from last year, according to China's Custom figures. The same figures also showed imports at only 6,369 tonnes for the first three months of the year.

Corn futures for July delivery rose 9.75 cents, or 2.6 percent, to US$3.81 a bushel on the CBOT, the highest close in two weeks.

Futures have risen 50 percent in the past year, reaching a 10-year high of US$4.5025.

China's meat and poultry production, which consumes more than 60 percent of its corn crop by 5 percent to 81 million tonnes last year, according to the National Bureau of Statistics. Feed demand and animal production may have even grown faster if not for animal diseases.

USDA estimates global corn reserves would reach the lowest in two decades as demand exceeds production.

Corn is the biggest US crop, valued at a record US$33.8 billion in 2006. Soy came in second, at US$19.7 billion and wheat is the fourth, with US$7.7 billion.