BEIJING (Reuters) – China planned to release 1.08 million tonnes of corn from state reserves on April 13 in an effort to cool rising domestic prices, which have risen high enough to attract imports.
The large state sales were likely to dent domestic prices and discourage feed mills in the south from getting cheap corn, particularly from the United States.
U.S. corn futures jumped April 7 when rumours circulated about Chinese buying interest.
Some Chinese feed mills inquired about U.S. corn prices after tight domestic supply pushed domestic prices as much as $40 per tonne above U.S. corn, traders said.
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Of the total sales, 500,000 tonnes were to be released from state stocks in three major growing provinces in the northeast, where prices rose to record high levels driven by Beijing’s stockpiling program, an official announcement said.
The sales in the northeast were the first since December when Beijing suspended auctions in the area, aiming to shore up prices and boost farmers’ incomes after the harvest.
The rest, 580,000 tonnes, were to be sold in Guangdong and Jiangsu provinces in the south and east, according to the document posted on the National Grain & Oil Trade Centre website.
Output of corn in China, the world’s second largest producer and consumer after the United States, was estimated at 138 million tonnes in 2009, according to Shanghai JC Intelligence, down from the previous year’s 165 million tonnes because of drought in major growing areas in the northeast.
This could drag down China’s closing stocks to around 49 million tonnes at the end of this year, from 53 million tonnes last year, as the country’s annual consumption is forecast by the U.S. Department of Agriculture to rise nearly five percent to 159 million tonnes.
