July 11, 2011

 

China's corn imports may top five million tonnes since March
 

 

China may have bought as much as five million tonnes of corn since March and traders expect the country to shop for more, as it stockpiles the feed grain following a slide in global prices from record highs.

 

Chicago Board of Trade corn has lost about a fifth of its value since hitting a record high of US$7.99-3/4 a bushel on June 10 after US government shocked the market with a forecast for a potentially record-large corn crop.

 

"Given the attractive price, we believe that China may have bought quite a lot over the past days, a total volume of at least five million tonnes since March," said a Beijing-based industry source.

 

"Our balance sheet shows that China needs to import at least 10 million tonnes in 2011-12. Even with acreage increase of corn at home, the volume is needed to cover domestic consumption, along with needs to replenish state stocks and enough to cool speculation at home."

 

Another industry source in China said the country may have already purchased five million tonnes or on its way to reaching that figure.

 

The USDA confirmed the sale of 540,000 tonnes to China on Thursday (Jul 7) and another 300,000 tonnes were sold to an unknown destination, which traders said was China. The sales announced by the USDA were in addition to around two million tonnes the nation has already purchased this year.

 

"Last week and this week China has been buying US corn and we expect they will continue to take more at these prices which is a very bullish factor," a Japanese chief commodities analyst said.

 

"Our estimate is that they will easily take five million tonnes of US corn this year and most of the buying will take place in July and August," said the analyst, whose estimate was in line with that of the US Grains Council.

 

US corn futures rose for a second straight session on Friday as China's purchases buoyed the market, which is on track for a weekly gain, snapping a three-week losing streak.

 

China, the world's biggest consumer and producer of pork, could buy up to 10 million tonnes of the feed grain as it fights food inflation and replenishes its depleted reserves following aggressive state sales to cool down domestic prices.

 

A senior industry analyst has said that Beijing had set aside funds to buy between 9-10 million tonnes overseas to refill reserves, which have been falling to their lowest levels in years.

 

Still, some traders doubted that the country would take 10 million tonnes.

 

"Ten million tonnes of imports sound very unrealistic," a source with a state-run trading company said. "Imports so far we think are below five million tonnes. China has bought some after the price slump and we cannot confirm the exact volume."

 

Traders were awaiting the US export sales report for further evidence on China's purchases.

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