October 19, 2006

 

China's COFCO mulls more corn, wheat exports

 

 

China National Cereals, Oil & Foodstuffs Corp (COFCO) is poised to export more corn and wheat in the 2006/07 market year starting October, because a good harvest and rising prices on the international market make exports profitable, a senior company official said Tuesday (Oct 17).

 

"There's a good opportunity now to export corn and wheat, with domestic production expected to be good and prices in the international market on rise," said Yu Xubo, vice general manager of COFCO.

 

The state owned COFCO, China's largest grain trader, is the parent company of food and beverage company COFCO International Ltd.

 

China's corn output is expected to total 141 million tonnes in 2006/07, while wheat production will probably reach 105.3 million tonnes, according to the China National Grain & Oils Information Centre, a major government-backed think tank in the agricultural sector.

 

"We are currently in the process of applying to the Ministry of Commerce and the National Development and Reform Commission (NDRC) for export quotas," he added.

 

The NDRC is China's top economic planning agency.

 

China's central government issues grain export quotas, under which exporters could get a package of benefits for their exports, including subsidies and tax rebates.

 

Yu did not state how much export quotas the COFCO expects to receive, but saying "the government will review overall domestic demand and state grain reserves before releasing export quotas".

 

Nevertheless, he said exports will support domestic prices and help keep grain stocks at a reasonable level.

 

China may suffer from an oversupplied grain market in 2006/07, with production exceeding demand, Yu added.

 

China's corn exports totalled 2.26 million tonnes in January-August, down 65.7 percent from last year, while wheat exports soared 186.6 percent on the year to 454,057 tonnes, according to Chinese Customs.