October 29, 2010

China's Cofco may buy US corn after spring 2011

China's largest state-owned grain trader, Cofco Ltd, has not bought any US corn shipments in the marketing year that began October 1 but may consider purchases after the spring of 2011, senior company executives said Thursday (Oct 28).

As China's appetite shifts the global grain landscape, a recent USDA forecast that China may import one million tonnes of corn this marketing year has spurred market speculation that the Asian giant is in the market for more.

However, Cofco executives said the company hasn't booked shipments due to the high price.

US corn futures reached two-year highs last week on concerns over US production but have eased this week on a stronger dollar. The US is the world's top corn producer and exporter.

Cofco would be the state agency most likely to book large US corn shipments if any were made, said an analyst with the state-linked Chicorn Network consultancy.

However, Chicorn dismissed market speculation of massive new corn imports by China, as it was based mainly on forecasts rather than fact.

China imported 1.2 million tonnes of corn in the first nine months of this calendar year, 87 times more than the volume imported in the same period last year. In contrast, it exported just 107,404 tonnes from January to September 2010.

The government has been auctioning corn reserves this year to stave off rising prices, and some grain executives have openly questioned the sufficiency of current reserve levels, which the government never publicly discloses.

Some private-sector estimates of reserve levels stand at around 1-2 months worth of consumption.