October 24, 2011
The Chinese government began releasing corn from government reserves into the market since September and has reportedly released approximately 3.7 million tonnes (145.7 million bushels) to date.
Releases were accomplished through normal sales channels rather than a public bid process. US Grains Council sources suggested this may reflect an attempt to monitor sales volumes more tightly due to concerns regarding actual stock levels.
Chinese market insiders also suggested China may restrict new-crop corn procurement by the main buyers in Northeast China this year.
Industrial processing companies and possibly small feed mills and livestock farms are likely to be the first sectors affected, followed by large enterprises like COFCO and the China Grains and Logistics Corporation (CGLC). Finally, large grain enterprises could see restrictions on purchase volumes, and bank lending for some large buyers could be tightened.
Meanwhile, Zhang Xiaoqian, vice director of China's National Development and Reform Commission (NDRC), said China is likely to use its huge foreign exchange reserves to buy staple commodities as needed. That could mean more US commodity sales as the US dollar appreciates and commodity prices fall, analysts said.