March 18, 2004

China 2003-04 Corn Exports Seen Likely Underestimated By USDA

Chinese corn exports in the 2003-04 marketing year are likely underestimated by the U.S. Department of Agriculture, traders and analysts in China said Wednesday.
 
China's corn exports are forecast at 8.00 million metric tons for 2003- 04, sharply lower than the 15.24 million tons exported in 2002-03, according to USDA's March supply/demand report.
 
But higher-than-expected sales in the first two months of 2004 lifted China's exports to around 6.685 million tons, as measured from the beginning of the marketing year in October to February, official custom figures show.
 
In January and February 2004, China exported around 1.02 million tons of corn, the China Securities newspaper reported Wednesday, citing data from China's General Administration of Customs. China's corn exports from October to December 2003 reached 5,670,531 tons, official custom figure said.
 
In order for the USDA forecast to hold up, China would have to export only about 1.315 million tons of corn in March-September period, or a monthly average of 190,000 tons.
 
FIRM FREIGHT AND CBOT
 
It's highly unlikely that China would sell such a small amount through September, given that Chinese corn prices would be competitive even without any export subsidies, analysts said.
 
On Wednesday, prices at the top corn-exporting Dalian port were quoted at 1,240 yuan ($1=CNY 8.277) a ton, CNY10/ton higher than a week ago.
 
South Korea's Major Feedmill Group bought 50,000 metric tons of corn via private talks late last week. If the corn is sourced from China, MFG will pay between $174.98-178.80/ton, cost and freight, for arrivals in June.
 
By comparison, U.S. No. 3 corn was offered to Japan around at $198/ton Monday, C&F, May-June shipment.
 
U.S. corn futures have rallied in recent months, supported by falling global stocks and the need to buy more acreage this spring, analysts said.
 
Chicago Board of Trade corn futures ended lower on Tuesday after hitting a fresh 6 1/2-year high early in the session.
 
Soaring freight costs from the U.S. to Asia also favors Chinese corn exports in the coming months.
 
Feed-ingredient buyers in South Korea, one of the top corn importers in the world, will turn to Chinese supplies as long as the price gap between China and U.S. corn is $10/ton or higher, a trader from China National Cereals Oils and Foodstuff Import & Export Corp, one of the two state authorized exporters said Wednesday.
 
Local governments in major corn-exporting areas in northeastern China also favor more corn exports so that they can reduce storage subsidies on old- corn stockpiles.
 
Unless China corn prices catch up with U.S. corn in the coming days, it is very likely that China could maintain an average export of 300,000-400,000 tons in the remaining of 2003-04, analysts in Beijing said. That would translate into a range of 8.80-9.50 million tons in 2003-04, analysts said.
 
In February, China's government allocated 1.40 million tons of corn- export quota for the first half of 2004.