September 21, 2011


US-China tension on poultry issue affects CBOT corn



An attack on Beijing's chicken imports by Washington has caused CBOT corn prices to weaken.


Ron Kirk, the US trade representative, urged the World Trade Organisation to investigate Chinese duties imposed a year ago on imports of American broiler meat, terming the levies unjustified.


"China must play by the rules," Kirk said, blaming the restrictions for cutting by 90% a trade that had been worth US$1 billion, and putting 300,000 US agricultural jobs at risk.


The US-China tensions were blamed for a fall back in corn futures after they temporarily  returned above US$7 a bushel, after Beijing's announcement of the auction of 3.7 million tonnes of the grain from state stocks "to meet market demand" stoked expectations of imports too.


Chicago had buzzed on Monday (Sep 19) to rumours that China was in the market for four to five million tonnes of corn imports, talk given credence by the rise in prices to record highs of approaching US$10 a bushel on cash markets.


The potential for Chicago corn futures "is well beyond the recent highs if China is back", Grain Analyst trader Matthew Pierce said, highlighting Chinese imports of 4.7 million bushels of US corn last week, as highlighted in cargo inspection data.


However, Kirk's attack, coupled with a lack of further confirmation of US interest, was blamed for pulling Chicago's December corn contract back to a one month closing low of US$6.90, one quarter a bushel.

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