Chinese demand has become a hot topic in the corn market again on the heels of a new Chinese purchase of U.S. corn and a U.S. Grains Council report indicating potential for China to import “a huge amount” of U.S. corn in the next several months.

"An opportunity exists for China to import a huge amount of U.S. corn before the 2010 crop hits the market," USGC's Assistant Director in China, Sam Niu Yishan, said in a report after council officials toured the northeastern provinces of Heilongjiang and Jilin to assess crop production and supply.

There are very few temporary reserves left to be auctioned by the government, leaving it with only two options: to sell national strategic reserves – which are not as large as earlier estimates – or import, Yishan said.

On June 14, USDA reported sales of 120,000 metric tons of U.S. corn to China for 2009-2010 delivery, confirming market rumors of fresh sales. Chinese trade sources on Friday said that COFCO Ltd., China’s large state-owned grain trader had purchased three cargoes of U.S. corn for delivery between July and October.

The quality of China’s corn stocks is also of concern with 20-30% affected by mold in some storage facilities, Yishan said.

“This was caused by increased rains and snows but also because farmers put ears on the ground with wet and high temperatures for an extended period of time,” he said, also noting the moisture was as high as 38% during harvest. “This moisture situation will surely affect the market supply in the upcoming months, before the new crops come into the market.”

Meanwhile, China’s 2010 corn plantings are lower than expected due to abnormally heavy rains, snowfall and low spring temperatures, Yishan said. He estimated that 2-3% of land intended to be planted to corn was instead planted to other crop such as green beans, sunflowers and corn silage.

Despite a 15-18 day planting delay in Heilongjiang, corn germination was ideal and weather conditions were the best they’ve been in recent years. However, the corn looked “not as strong as normal,” which could impact yield, Yishan said.

Concerns about soil moisture in northeast China and also for the North China Plain are also rising due to persistent warm, dry weather since mid-May.

Editor’s note: Richard Brock, Corn & Soybean Digest's marketing editor, is president of Brock Associates, a farm market advisory firm, and publisher of The Brock Report.