August 16, 2010

China's corn futures hit record high

China's corn futures has jumped to a new record after the government cut stockpile sales, boosting speculation inventories are dwindling.

The government will offer 400,000 tonnes from reserves in major producer regions in the northeast this week, less than half of the amount offered a week ago, the China National Grain and Oils Information Center said. The government sold 88% of one million tonnes offered last week, compared with 67% of the same amount the week before.

Corn for January delivery in Dalian climbed as much as 1.5% to CNY2,001 (US$294) a tonne, the highest ever for the most-active contract. Futures have surged 16% in the past year as drought reduced output in major northeast producer regions including Jilin and Heilongjiang.

"The reserves essentially showed the market an empty hand, and that further stoked bullishness by traders," said Dong Shuangwei, a manager at Beijing Capital Futures Co.

The government has sold 11.7 million tonnes in weekly auctions since April. According to the USDA, the US has shipped 608,000 tonnes of corn to China, and has 644,000 tonnes in outstanding sales to the Asian nation as of July 29.