November 7, 2003

China May Halt Corn Exports in 2004
 

China may halt corn exports next year after a recent climb in domestic prices to their highest levels for years, traders and industry sources told Reuters News Service on Wednesday.

Following a government meeting in Beijing in late October, signs are growing that China may even default on contracts for corn shipments after January, they added.

International corn prices as well as freight rates may shoot up if South Korea, the world's second-largest corn importer and the top buyer of Chinese corn, has to cover most or all of its needs from the United States.

"I don't think China will ship out any corn after January," said a trader in Tokyo. "If South Korea were to shift to the U.S., corn prices would have to go up, also the freight rates. They are already at crazy levels."

While the traders had been told by exporters that Beijing was yet to decide on grain export policy next year, one industry source heard Beijing had stopped approving 2004 grain exports after issuing some permits to two authorized exporters.

"They have stopped approving 2004 (corn) exports," said the industry source in Beijing. "They are now saying if you want to export, do it at market prices."

Over the past few years, Beijing has provided financial support for exports of corn and feed wheat in an attempt to reduce large stocks that depressed domestic grain prices and cost Beijing a fortune in storage costs.

Asked about 2004, an official at Jilin Grain Group (JGG), one of China's authorized corn exporters, said: "For next year, it (the policy) is not clear. We will execute old contracts. But it is difficult because domestic prices are high."