China may surpass corn import quota

China, the world's second-biggest corn consumer, may have issued more import permits to meet its shortage, according to analysts.

The country's demand may outstrip supply by as much as 10 million tonnes in the year through September 30, which may be met by releasing stockpiles or additional imports, analysts said.

Corn for July delivery in Chicago climbed 1.6% earlier to US$3.70 a bushel on speculation China may increase purchases. The country has ordered almost one million tonnes and will probably buy more, Alvaro Cordero, manager of international operations- marketing at the US Grains Council, said. That would be the biggest purchase in 14 years.

China has sold about 4.67 million tonnes of corn in weekly auctions since April 13 as the government pares stockpiles to cool domestic prices that have climbed 10% in the past six months, according to data.

Corn for September delivery gained 0.4% to RMB1,964 (US$288) a tonne on the Dalian Commodity Exchange, 1.3% below the record for the most active contract in May 2008.

The nation has pledged to use its stockpiles to curb domestic prices. The country has "more than enough" corn to meet demand, with just a third of inventories ample to cover current consumption, Zeng Liying, deputy director of the State Administration of Grain, said this week. Prices have been driven by speculation and do not reflect fundamental supply and demand, Zeng said.

China has purchased about 600,000 tonnes of US corn in the past month, according to the USDA. A reduced crop last year and planting delays have increased speculation of a shortage.

The country will probably produce 166 million tonnes of corn in the 2010-11 year, up from 155 million tonnes the previous year and compared with 165.9 million tonnes in 2008-09, according to the USDA.

Analysts said that China's corn harvest last year may have fallen 20 million tonnes from the year before on drought. Inventories at the end of the 2009-10 year will probably be 48.7 million tonnes, giving a stockpile-to-usage ratio of 30%, the highest level in the world, analysts said.