December 05, 200

 

 

China Corn Exports To Continue, Despite Slow Down in Early 2004

 

China's aggressive corn export program will slow in early 2004, as the Chinese government could choose to announce its new export policy after the traditional Spring Festival, industry sources in Beijing said Friday.

 

Without a clear word from Beijing about its financial support package for corn exports, it is unlikely that Chinese corn exporters will start to make fresh offers, traders said.

 

But China will remain a corn exporter in 2004, officials said, quashing rumors the country will exit the export market because of low stocks.

 

"We are still waiting for the policy. No one knows when (it will be announced). It could be weeks later, or months later, say, after the Spring Festival," an official from China National Cereals, Oils & Foodstuffs Import & Export Corp., or Cofco, said.

 

Cofco and the Jilin Grain Group Co. are China's two authorized corn exporters.

 

The Chinese Lunar New Year, or Spring Festival, starts Jan. 22 in 2004, and the holiday season usually lasts well into February.

 

"But we'll try our best to keep our (export) markets, and we have enough stocks," said the Cofco official.

 

Industry sources in China noted that Beijing often announces its corn export policy after the Spring Festival, and sometimes even as late as March, like this year. In 2003, it wasn't until late March that the government informed exporters the financial support package for corn exports remained intact. That was about a week after the new government was elected in the National People's Congress.

 

Chinese corn exporters have to wait and risk losing market share to competitors while Beijing is mapping out the new policy, said sources. In recent weeks, China hasn't signed any corn export deals with traditional buyers like South Korea, leaving international grain traders wondering if China would stop exports in 2004.

 

In the last month or so, it was reported that China is rushing to export as much corn as possible before the end of December on fears the government won't issue export licenses in January and February next year. Traders said the rush to export has also led to problems in finding vessels, which may hurt some deliveries to end users, it was reported earlier.

 

TRANSPORT PROBLEMS TO SLOW EARLY 2004 EXPORTS

 

But many industry sources contacted Friday dismissed talk that China will stop exports in 2004. Corn stocks in Jilin province - the top corn producing region - alone are over 20 million tons, and the local government has to pay heavy storage subsidies each year.

 

In a recent top economic conference held in Beijing, the government also pushed for more exports of agricultural products.

 

Chinese corn has been popular among its Asian neighbors because of its lower prices, shorter shipment periods, non-genetically modified status and flexibility in cargo sizes.

 

Exports will continue, although the ongoing logistic problems could dent Exporters' efforts, traders said Friday.

 

In December, Chinese corn exports are likely to fall below exports in October at 1.53 million tons, as frustrated exporters are finding it impossible to get corn moved to Dalian where the top corn exporting port is located.

 

"The Spring Festival is one week earlier than last year and the availability of railway cars for grain exports is getting very tight," said a trader from a local trading house in Dalian.

 

According to traders, China could export 5 million tons of corn in the last quarter of 2003, because exporters want to move as much corn as possible overseas.

 

But the availability of railcars gets tighter as Chinese people will travel back home to their families for the holiday season, traders said.

 

In the first 10 months of 2003, China exported 12.25 million tons of corn, 46% higher on year. In the 2003 calendar year, exports are forecast to hit 15 million tons, from an official 11.7 million tons in 2002.