May 30, 2007
US corn export to rise as China cuts supplies
US corn exports are expected to rise in the next few months as China scales down its grain exports.
A Goldman Sachs commodities report said that as China reduces supplies, countries like South Korea, Japan and Mexico would look to the US for supplies. Moreover, the weak US dollar at the moment also makes it attractive for these countries to buy US corn.
Mexico and Japan are the top two buyers of US corn and South Korea is also among the major buyers. Japan and South Korea also buys from China.
China only issued corn quotas of 1.25 million tonnes for April, far less than the expected 3 million tonnes. China is also unlikely to announce new quotas until authorities there have a clearer picture of expected usage in the nation.
China's authorities would have to play a fine balancing act between ensuring enough supplies for the domestic market and exports.
With the rapid rise in demand from the growing ethanol and corn processing industry and a recovering feed industry which is all important to the nation's food supply, China is unlikely to issue corn export quotas liberally.
The United States is the world's largest exporter of corn, followed by China and Argentina.
Cheaper corn from China and higher ocean freight charges have affected US corn exports earlier this year. However, freight charges have fallen recently and it looks increasingly likely that China would reduce its corn exports.
