December 11, 2008

China may offer a full rebate on the 13 percent value-added tax for corn exports as it looks to export as much as five million tonnes next year, traders and industry sources said on Wednesday (Dec 10, 2008).

Domestic corn prices have kept falling even after Beijing announced it would double its corn purchases for state reserves to 10 million tonnes.

An industry source stated that government authorities are still looking at any possible measures to support domestic prices.

Domestic market participants were talking about a proposed export amount of five million tonnes of corn, though traders said there was no final decision yet.

Traders said the government bodies could not agree on whether they should support Chinese farmers directly or aid corn exports to benefit foreign importers.

Chinese corn was priced on Wednesday at RMB1,500 (US$218.7) per tonne in Dalian, the main port for exports, higher than US corn at US$155.5 a tonne.

Though cheaper US corn was attractive for Chinese feed mills in southern China, none had moved to import for fear by government action to prevent genetically-modified (GM) corn imports.

China feed mills said they had not received the import quotas for 2009 and they may not easily get through Beijing's complicated procedures on imports of GM grain.

US$1 = RMB6.856 (Dec 11)