Chinese corn processor, Xiwang Sugar Holdings Co. Ltd., says that it has scrapped plans to import a second cargo of U.S. corn this year after successfully taking delivery of China’s first significant purchase of the grain in years late last month.
Xiwang’s president, Wang Yong, says a rise in import costs was behind the change in plans. Wang says the company would consider importing corn next year and would source more corn this year from northeast Jilin province, the country's largest corn-producing province.
He said Xiwang was considering applying for larger 2006 import quotas after getting 2005 quotas totaling 100,000 tons.
China, a top corn exporter as recently as 2004, is projected to become a net importer as early as next year, due to rising domestic demand, especially from the corn-processing sector.
A second possible record corn harvest could help stave off China's need for corn imports this year, but senior grain officials expect the country to import more than a million tons of corn from 2008.
Wang Di, assistant to the chairman, tells Reuters News Service that Xiwang paid $152/ton ($3.86/bu.), including cost and freight, for the first 52,000-ton U.S. corn cargo that it booked in May.
The price of U.S. corn had risen to around $170/ton ($4.31/bu.), while corn prices in Shandong were likely to drop in September due to the domestic harvest, Wang Di says.
But Wang Di says domestic corn prices were likely to climb gradually in the long run due to larger domestic consumption.
To prepare for larger imports in the future, Xiwang is expanding its warehouse capacity to 200,000 tons, Sunny Leung, financial controller, tells Reuters.
Editors note: Richard Brock, The Corn and Soybean Digest's > Marketing Editor, is president of Brock Associates, a farm market advisory firm, and publisher of The Brock Report.
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