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Buyer Community> Trade Intelligence> Agriculture> UPDATE 2-China buys Thai corn, more large buys unlikely
Source: Reuters

UPDATE 2-China buys Thai corn, more large buys unlikely

Published: 29 Sep 2009 02:13:02 PST

* New Hope says imports "several thousand tones" of corn * Deal comes as feed mills face tight supplies * Thai trader says sells 3,000 T to New Hope at $205 * Traders say big Chinese purchases unlikely on prices, stocks (Recasts with quotes, details)

BEIJING/BANGKOK, Sept 29 - A feedmill in China has bought several thousand tonnes of Thai corn in recent weeks in one of the country's first large purchases this year, although traders said it was unlikely to become a major importer soon, because of weakening domestic prices.

Any large corn purchases by China, a net exporter of the grain until 2003, could ignite the global benchmark Chicago Board of Trade price, which has lost a quarter of its value since its June peak on expectations of a bumper U.S. crop.

China's largest feed mill, the New Hope Group, has imported corn from Thailand and will continue to buy corn globally if prices are attractive, Wang Hang, the firm's vice-president said, although he declined to give price details or the exact quantity bought.

Thailand's Nanapan Agri-Industrial Co, a leading corn exporter, said it had sold 3,000 tonnes of corn to New Hope Group through a Japanese trading house at $205 a tonne, including cost and freight.

"We expect to sell more to China as fresh demand emerges," said Tavee Tantiponganant, the company's president.

The import came as feed mills in southern China face tight supplies because of logistics problems in securing corn from Beijing's large stockpiles, located several thousands of miles away in the country's northeast.

China's self-sufficiency in corn is suddenly in doubt as a drought threatens to cut the harvest by as much as 10 percent.

Still, traders said China, which allows corn imports through quotas, is unlikely to open the gates to cheap U.S. corn imports as the government holds large stocks.

Annual import quotas expire if not used by September and Beijing will have to reallocate quotas before anyone can import.

"I don't think large purchases will take place for the next two to three years," said Nobuyuki Chino, president of Tokyo-based Unipac Grain.

"China will manage its demand and supply situation rather than import U.S. corn. They will only buy some quantities from Thailand if it's cheaply available."

BUMPER HARVEST

China had a bumper harvest of 166 million tonnes last year and, largely to protect farm incomes, the state stockpiling agency Sinograin bought up 35.4 million tonnes. That was a huge increase over the previous year, when the stockpiling programme was tried out and the government bought 5 million tonnes.

Even feed mills might not be encouraged to import more as the arbitrage between domestic and U.S. corn prices has narrowed to around $15 a tonne from about $30 last week as CBOT prices have risen and at the same time Chinese cash prices have eased, under harvest pressure.

"Importers are not enjoying a big advantage any more as domestic corn prices have eased and U.S corn prices have risen," said one trading manager with an international trading house in Beijing.

"We do not expect that many mills will be importing, given the upcoming domestic harvest."

For graphics of China's corn exports and Chicago Board of Trade corn prices, please click: http://graphics.thomsonreuters.com/099/CN_CRN0909.gif

New Hope's Wang said corn shipments from Thailand would arrive at Huangpu port in China's southern province of Guangdong after the week-long October holiday and the grain was not genetically-modified.

Beijing had previously interrupted the company's supply of gene-modified corn from the United States. The company, which is closely watching U.S. prices, had been allocated an import quota of 200,000 tonnes, said Wang.

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