BEIJING (Reuters) – The chance of China importing more corn in coming months depends largely on whether Beijing can tame runaway domestic prices and if bad weather threatens the new harvest, Chinese market participants said May 14.China’s state grain trader, COFCO Co. Ltd., ignited grain market speculation this week by buying 369,000 tonnes of U.S. corn, the biggest such purchase since 2001. When added to a purchase in late April, China has bought 486,000 tonnes this spring.Chinese economic growth has resulted in increased need for corn, said U.S. Grains Council president Thomas C. Dorr on the website, www.grains.org.“We also … are aware that the crop last year did suffer from drought in China and we also know it’s been a cool and wet spring in China. And because they don’t access the biotechnology hybrids that we have in the United States, the likelihood of their production being down somewhat this year has also been enhanced.”Traders believe last year’s drought-affected corn crop was between 140 and 160 million tonnes, down from 166 million the previous year. Demand is about 150 million tonnes.A Reuters poll found some U.S. traders and analysts expected China to import anywhere from 700,000 to six million tonnes.But Chinese grain traders and analysts said the country’s supply and demand are basically balanced and COFCO’s purchase was designed to provide some short-term relief for Chinese prices.“I don’t think imports of six million tonnes are possible. The key factor in the question of further imports is the trend of domestic corn prices,” said a senior trading manager with COFCO.COFCO’s purchase aimed to help feed mills ensure supplies, supporting government efforts to cool rising domestic prices, which could push up feed prices and cause wider inflation.“If prices stop rising, there may be no need for more imports,” said the executive, who declined to be identified by name.“We don’t think there is a big shortage at home.”Unlike soybeans, which China cannot produce enough of, China’s corn stocks should be enough to cover domestic demand, traders said, provided middlemen do not hoard it on the pretext of possible shortages from lower harvests.“Supply and demand are basically balanced this year if there’s no problem with the new crop. There is no big shortage right now. Large imports of a million tonnes are still Tales from the Thousand and One Nights,” said the executive.Despite this spring’s planting delays, the coming harvest might not shrink if there is enough sun during the growing period, agriculture experts said.“If the weather later is normal, prices may fall, which will reduce the prospect for more imports,” said the trading manager.China has not imported genetically modified corn for many years, but strict supervision by the country’s quarantine bureau and the long distance to inland Chinese feed mills mean imports could incur further costs.To curb price rises, Beijing has already banned bidding by trading companies and corn processors at weekly government corn auctions to ensure enough supplies for feed mills.“But in the long term, China’s large imports are inevitable. Several million tonnes of imports are not a big figure for China,” said the trading manager.
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