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Issue #588

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Intermodalism

Inland Ports

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2014 Media Kit
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China buys US corn

By: | at 08:00 PM | International Trade  

China purchased 115,000 tons of U.S. corn, its first significant purchase in nearly four years, ending weeks of rumors that the country was seeking foreign supplies to tamp down rising domestic prices.

The U.S. Department of Agriculture said exporters had reported the sale to the department and that the cargoes would be shipped by end of the current marketing year on Aug. 31.

The corn was expected to be shipped to China from the Pacific Northwest, the shortest sea route from the United States to Asia, at the end of May and was priced between $230 and $240 per ton, on a cost-and-freight basis, traders said.

China’s purchase comes at a time when the country has been selling corn from its reserves in a bid to tamp down rising domestic prices, traders and analysts said.

The traders and analysts were uncertain about whether there would further regular purchases from China, or if China would only be buying sporadically and in small quantities to meet needs from its hog and poultry industries as they arise.

“We’ll have to watch what their weather is like,” said Bill Nelson, economist with Doane Advisory Services, referring to wet weather in parts of China’s corn-growing region.

Eye on China Corn Stocks, Planting
“We’ll also need to keep an eye on their stock level,” Nelson said, about China’s corn ending stocks from the 2009 harvest.

U.S. corn was competitively priced for exports and that prices in China were relatively high, said analyst Don Roose of USA Commodities in West Des Moines, Iowa.

“Corn in China is about $7 (per bushel) and U.S. corn is very competitive,” he said, adding that it was uncertain if the purchase by China was the first of many more to come.

“This story had been circulating for a long time. At this stage, no one knows if this is the start of something or if China is just buying to fill in the blanks,” he said.

Traders said there was speculation in the market that the sale to China could be a “test” to whether China would issue import permits and allow these cargoes to land there as a way to help cool rising domestic prices. But one senior export trader said the sale would have been unlikely if the importer had not secured all the necessary approvals from the Chinese government. (Reuters)