December 29, 2006

 

China's corn exporters find government support

 

 

China's corn exports are expected to pick up over the next few weeks, particularly to Taiwan, with help from the government, traders said Thursday.

 

The government is selling state stocks to Chinese grain companies who met difficulty in acquiring corn for export in recent months due to a surge in prices.

 

"Corn exporters have bought over 1.1 million tonnes of corn of old crops from state reserves in Jilin and Heilongjiang provinces recently, in a bid to make timely shipments to customers," said a trader based in Beijing.

 

Jilin and Heilongjiang are two major corn-growing regions in China's north-east.

 

Chinese grain companies signed contracts in July-October to export 4 million tonnes of corn for delivery late this year and early next year, according to the China National Grains & Oils Information Centre (CNGOIC), which falls under the State Grain administration.

However, some corn exporters have said they must postpone some deliveries, as soaring prices on the domestic market have made procurement increasingly difficult.

 

China's corn prices have risen by between RMB200 and RMB300 a tonne over the past two months, thanks to rising demand from corn processors and exporters, coupled with speculative buying.

 

Still, exporters will continue to make purchases on the local spot market as "some state stocks of old crops are not up to the standard for exports," said a trader with Jiliang Group, a major grain trading firm in China.

 

Despite tight domestic supplies, China's corn exports to Taiwan are likely to rise.

 

"We are willing to promote corn exports to Taiwan on a regular basis, with an eye on the interest of Taiwanese livestock farmers," said Li Weiyi, spokesman for Taiwan Affairs Office under the State Council, China's cabinet.

 

"It will be a considerable boost to domestic prices, if China exports to Taiwan on a large scale," the Beijing based trader said.

 

Taiwan usually bars corn imports from the mainland, its political rival. But it is temporarily allowing import of

feed corn from the Chinese mainland from Nov 20 to Feb 28, in order to check high domestic prices and meet demand from farmers ahead of the Lunar New Year, according to the island's Bureau of Foreign Trade.

 

The Spring Festival, which will run from Feb 17 to Feb 23, is Taiwan's most important family event.

 

China's corn production is expected to reach 142 million tonnes for 2006, up 1.9 percent from the previous year, according to the CNGOIC.