China Corn Exports Seen Back On The Drawing Board

Word that central authorities could grant permission for corn-growing provinces to export between 1.5 and 2.5 million tonnes of new crop early in 1997 could not be immediately confirmed as China's National Day holiday continued.

Traders in Hong Kong, Singapore and South Korea said Chinese corn was currently too expensive, and that buyers in the region were covered to year-end, some even through to mid-1997.

Export licences, if granted, would not be used before early 1997, and sales would be kept to a minimum, traders said.

The provinces will export just a small amount and it will be because if they export nothing they might not get licences the following year, one Hong Kong source said, adding he thought exports would be capped at 300,000 tonnes.

He expected Chinese corn prices to remain higher than competing exporters, forcing provincial authorities to subsidise any exports and thus encouraging them to keep sales low.

Grain bureaux borrowed to purchase grain from farmers, and would have to borrow further to subsidise exports if domestic prices did not align with world prices, traders said.

A fear of fuelling inflation could also dampen enthusiasm for exports, as it did this year, they said. Chinese corn is now 1,370 yuan ($165) per tonne f.o.b (free on board) at the northern port of Dalian.

Freight and the quality spread would add another $15, traders said.

US corn is currently arriving in Far East ports priced around US$156 cost and freight, traders said.

The crop currently being harvested in the northern provinces of Jilin, Heilongjiang and Liaoning could be as high as 120 million tonnes, trade and industry sources have said.

Official figures put 1995 corn production at 101 million tonnes. Annual demand is about 115 million.

This would give China a bumper 1996-97 crop, adding to reserves