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Buyer Community> Trade Intelligence> China> UPDATE: China Grain Export Quota To Have Limited Mkt Impact

UPDATE: China Grain Export Quota To Have Limited Mkt Impact

Published: 31 Dec 2008 02:15:15 PST

BEIJING --China's grain export quota for 2009 won't help ease the domestic supply pressure much because global prices are lower, analysts said Tuesday.

China will soon issue a corn export quota of 500,000 metric tons, according to several industry participants.

They also said the government was likely to issue a wheat export quota of 500,000 tons as well.

However, they said they hadn't heard of any subsidy policy or tax rebates for exports; domestic prices are higher than global ones.

"China's grain doesn't enjoy a price advantage (over global ones)," said Duan Yujie, a manager at Changjiang Futures.

For instance, U.S. corn exported to Asian ports is CNY400-CNY500/ton lower than domestic corn, said a big cash trader.

Analysts said China won't be able to export grain if the government doesn't provide subsidies or tax rebates to exporters.

However, even if China announces such supportive policies, its grain exports may only further damp global prices, putting pressure on domestic prices and hurting the government's plans to support them, said Huang Xiao, a manager at Capital Futures.

Meanwhile, the quota volume is low compared with China's big harvest this year.

China's corn output this year has been estimated at 156 million tons, up 2.4% on year, while wheat output is seen at 112.5 million tons, up 2.9%, according to China National Grain and Oils Information Center.

-Zheng Xiaolu contributed to this story, Dow Jones Newswires; 8610 6588-5848; tracy.zheng@dowjones.com

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