September 30, 2009

China's largest feed mill, the New Hope Group, has bought 3,000 tonnes of Thai corn in recent weeks in one of the country's first large purchase this year but traders said it was unlikely to become a major importer soon due to weakening domestic prices.

 

Any large corn purchases by China, a net exporter of the grain until 2003, could trigger a hike in the global benchmark Chicago Board of Trade price, which has lost a quarter of its value since its June peak on expectations of a bumper US crop.

 

Wang Hang, New Hope Group's vice-president, said the company will continue to buy corn globally if prices are attractive.

 

Thailand's Nanapan Agri-Industrial Co, a leading corn exporter, said it had sold the corn to New Hope Group through a Japanese trading house at US$205/tonne, including cost and freight.

 

Tavee Tantiponganant, the company's president, said more corn supplies are expected to be sold to China as fresh demand emerges.

 

The import came as feed mills in southern China faced tight supplies due to the logistical problems in securing corn from Beijing's large stockpiles, located several thousands of miles away in the northeastern region.

 

China's self-sufficiency in corn is in doubt as a drought threatens to cut the harvest by as much as 10 percent.

 

However, traders said China, which allows corn imports through quotas, is unlikely to allow more imports of cheap US corn as the government holds large stocks.

 

The annual import quotas will expire if they are not used by September and Beijing will have to reallocate quotas before anyone can import.

 

Nobuyuki Chino, president of Tokyo-based Unipac Grain, said large corn purchases by China will not take place for the next two to three years as it will manage its demand and supply situation rather than import US corn. He added that China will only buy some quantities from Thailand if they are cheaply available.

 

Last year, China had a bumper harvest of 166 million tonnes. In order to protect the farmers' incomes, the state stockpiling agency Sinograin bought 35.4 million tonnes of corn. That was a huge increase over the previous year, when the stockpiling programme was being tested and the government bought 5 million tonnes.

 

Meanwhile, feed mills might not be encouraged to import more as the difference between domestic and US corn prices has narrowed to around US$15/tonne from about US$30/tonne last week due to the rise in CBOT prices and the easing of Chinese cash prices under harvest pressure.