China, the second-biggest corn consumer, will import more of the grain when domestic prices significantly exceed import costs, said Bao Kexin, president of China Grain Reserves Corp.
“We will buy if we need to,” Bao said today at the National People’s Congress in Beijing. Costly transportation and last year’s high domestic prices and brief plunges in U.S. prices prompted Sinograin to “seize the windows of opportunity,” Bao said.
Imports may rise to a record 7 million metric tons in the 2012-2013 marketing year from 4 million tons in 2011-2012, Rabobank International said Dec. 5. Corn futures rose to the highest in almost four months this week, spurred by at least 120,000 metric tons of orders from China last week.
“The government is shifting their tone and is having to admit to reality that the grain trade is changing,” Tommy Xiao, analyst at Shanghai JC Intelligence Co., said by phone from Shanghai.
China won’t require “large imports” this year as the country has ample supplies to meet demand, Nie Zhenbang, head of the State Administration of Grain said yesterday. Farmers in Heilongjiang Province will continue switching to corn crops from soybeans this year because of the grain’s better return, Sui Fengfu, party secretary of state-owned Heilongjiang Beidahuang Nongken Group, said in Beijing.
“In the future it’ll be a common phenomena to see China importing and exporting corn,” Bao said. “This is normal, as we have always said we will use” internal and external markets as two sources of supply, he said.
“Even the central government has to do its cost analysis,” he said.
Corn for May delivery was unchanged at $6.54 a bushel by 4:23 p.m. Shanghai time on the Chicago Board of Trade.
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