October 24, 2003
Corn Prices Rose Sharply; China May Seek Imports in 2004
China's corn prices have jumped following an upsurge in soy prices, triggering speculation the country may seek imports in 2004, traders and market analysts said on Friday, October 24.
To the surprise of many, corn prices in the southern province of Guangdong increased by RMB100/ton to close to RMB1400/ton in a day or two, even as the harvest continued in the northeastern province of Jilin.
"What this told me is that Chinese corn supply versus demand is not as abundant as government officials thought," said an analyst based in Beijing.
"Corn supply early next year will be quite tight. Probably some imports are going to happen, maybe next year."
In Chicago on Thursday, corn futures soared on talk that COFCO, one of China's two authorised corn exporters, had raised export prices by US$15/ton-US$140/ton, FOB.
Traders in China and the region said China was reluctant to make fresh offers for corn exports at present due to rising domestic prices and uncertainties over government corn exports policy next year.
Some said that while there was still some corn available from COFCO at around US$135/ton, FOB, for shipment this year, the other exporter, Jilin Grain Group (JGG), had stopped offers.
No COFCO or JGG official was immediately available for comment.
Most traders ascribed the corn price increases to soaring soy prices in China. That had led feed millers to use more corn instead of soymeal, now priced at around RMB3000/ton.
Besides, they said it was difficult to transport corn south from the northeastern provinces. That is because of delays in the harvest and strong exports as regional buyers avoid corn from further overseas due to high freight rates.
Traders and market analysts agreed that corn supply was tight in China, the world's number two exporter of corn this year with shipments of 12 million tons or more.
"One thing is clear: the cash market is tight. China is very hesitant to make export offers," said a senior trader at an international house.
"Eventually China needs to sell corn. It's a golden opportunity as Chicago is going up and up."
Traders and market analysts expected China's 2003 crop to stand at 112-115 million tons, compared with 114 million tons predicted by the U.S. Department for Agriculture (USDA).
