October 13, 2011
China is said to have purchased about 1.5 million tonnes of corn Tuesday (Oct 11), likely mostly from the US to replenish its dwindling state reserves, according to two executives familiar with the matter.
China had been widely expected to re-enter the corn market as US corn prices, reeling due to higher-than-expected supply estimates, fell 20% since early September.
Sinograin, or China Grain Reserves Corp, made the purchases, the executives with a state grain processing and trading company said.
The sharp erosion in global corn prices last month came amid sharply higher Chinese spot prices. Corn prices in the major processing province of Shandong have risen more than 30% since the start of the year.
"Sinograin bought the volume largely from two companies and a bit from others, altogether it was about 1.5 million tonnes for shipment from March to May," said one trading manager with an international trading house in Beijing.
He said the origins of the supply could be either from the US or Argentina. The exact amount of the purchase from the US was not clear. One executive said the deal was for at least 900,000 tonnes.
Beijing had set aside funds to buy between 9-10 million tonnes of corn overseas to refill state reserves, which have been falling to their lowest levels in years after sales over the past two years, analysts said.
US Grains Council expected a few months ago that China will import up to five million tonnes of corn in 2011.
Meanwhile, Sinograin is also in the market for soy and soyoil. The company bought about 100,000-120,000 tonnes of soyoil from Brazil and 700,000-800,000 tonnes of soy from the US for state reserves, several traders said.
Sinograin is looking for a total of up to two million tonnes of soy and up to 700,000 tonnes of soyoil to refill state reserves as it rotates out the old stocks, they said.
US soy prices tumbled about 18% last month, weighed by optimistic supply forecasts and a gloomy global growth outlook.
China may have bought its latest soyoil imports from Argentina. About 200,000 tonnes of Argentine soyoil was slated for export to China this year, Agriculture Minister Julian Dominguez has said.
The South American nation hopes to step up corn exports to China in early 2012 after finalising a market access agreement by the end of this year, Dominguez said.