Chinese Corn Exports Eyed

Chinese corn prices have recently fallen under the weight of a possible record harvest, igniting some hope for exports, especially as high freight rates make Chinese exports competitive in Asia against U.S. grain. However, China is not expected to become a major exporter of corn again.

Industry officials and traders tell Reuters News Service that domestic cash prices for corn in some parts of China, including Shandong, lost as much as 200 yuan ($25) per metric in the past one week as farmers began to harvest.

"If local prices keep falling, we will see more and more offers in China," says a trader at an international house. "But I don't think they are that eager to export a large volume. Local consumption has risen a lot."

The traders tell Reuters a small quantity of Chinese corn was still available at prices around $153/metric ton, FOB, or about $167-168 a ton, including costs and freights to South Korea, the top buyer of Chinese corn.

They estimated China had sold a total of about 1.2-1.5 million tons since August for shipment before the end of the year. This compared with China's monthly exports of more than 1 million tons in the past.

“They want to sell small quantities because of the harvest pressure. Yet I don't think they want to sell 3-4 million tons," says another senior trader in Shanghai.

"(Chinese) people do not want to give up the export market. They want to sell something. But it's different from a few years ago," the trader adds.

Many officials and traders also doubt a forecast by the China National Grain and Oils Information Centre (CNGOIC) that 2006 corn output will reach a record 141 million tons – up from 139.37 million last year.

As a result, they saw price pressure waning before too long, particularly as large exports and higher domestic consumption have cut the country's once huge grain stocks in the past four to five years.

Asked about exports, one official at a Chinese exporter says: "It's still unclear how much we can export ... It will take probably another three months before we can judge the price trend."

USDA currently projects that China will export 4 million metric tons of corn during 2006-07, unchanged from its estimated 2005-06 exports.

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.

To see more market perspectives, visit Brock's Web site at

http://www.brockreport.com/brockreport.