February 27, 2006

China suspends corn exports

China will suspend exports from March due to high domestic prices, traders and industry sources said.

The Government would cease export quotas and will not be handing out new ones from Mar 1, bringing corn exports to a halt this week.

In December, quotas were issued for exporting 4 million tonnes before end-February, which many traders and industry officials said was aimed at supporting domestic prices following the outbreak of bird flu.

The government usually allows export quotas being used past the expiry date. It was not clear how much of the quotas were left.

The quotas allow Chinese corn suppliers to collect government subsidies and tax rebates to pay for transport and storage costs. Exports will not be economically viable without government support due to strong domestic corn prices.

Corn prices in China have risen following the long Lunar New Year holidays in February, fueled by exports, increased demand and a strong showing in Dalian's corn futures.

Even old stock corns were snapped up at high prices in Jilin when it held an auction in February.