China, the second-biggest corn consumer, bought five cargos of U.S. corn this week after declines in Chicago prices made imports cheaper than domestic supply, researcher Grain.gov.cn said.
The purchases were by livestock feed mills in southern China for shipment in May to August, according to an e-mailed report from the researcher, a unit of state-controlled China National Grain & Oils Information Center. With these orders, China’s imports in the year through Sept. 30 will total 4.2 million metric tons, the researcher said.
China’s expanding livestock is increasing demand for feed grain and soybean meal, sending domestic corn futures to an all- time high this month and boosting optimism that its orders may help soak up an expected record U.S. crop. Still, China’s imports will be limited by state-issued quotas, said Cherry Zhang, analyst at Shanghai JC Intelligence Co.
“I would expect continued purchases in the next few days at the current price of $320, cost-and-freight, for imports,” Zhang said by phone from Shanghai. This year’s imports may total 6.6 million tons, she said, reiterating her company’s forecast.
May-delivery corn in Chicago rose as much as 0.5 percent to $6.235 per bushel before trading at $6.215 at 1:40 p.m. Beijing time. The contract had declined 4.1 percent this week before today on speculation that a report by the U.S. Department of Agriculture tomorrow will show farmers planted the most acres since World War II.
China issues 7.2 million tons of low-tariff quotas a year, with state-owned companies controlling the majority, while private companies split less than 3 million tons, Zhang said. Many companies only have quotas of a few thousand tons, not enough to enable them to purchase by bulk carriers, which usually carry 60,000 tons each, she said.
For China to have large-scale purchases, such as when it bought 3 million to 4 million tons last year, the orders will have to be by state-owned companies, Zhang said. “The impact on the market is limited” so long as the government remains sidelined, she said.
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