BLBG: Corn Extends Rally as China May Boost Imports as Reserves Drop
By Jeff Wilson
June 11 (Bloomberg) -- Corn rose, capping the biggest weekly gain since April, on speculation that shrinking inventories will force Chinese processors to boost imports from the U.S., the world’s largest exporter.
China, the second-largest corn user, sold 524,800 metric tons from government reserves today to meet domestic demand, the National Grain & Oil Information Center said. China may import a “huge” amount of U.S. corn, Sam Niu Yishan, the assistant director for U.S. Grains Council in Beijing, said in a report yesterday. China’s harvest declined 6.6 percent last year.
“Potential new Chinese corn imports will remain a supportive feature” for prices, said Greg Grow, the director of agribusiness for Archer Financial Services Inc. in Chicago. “There are people looking for more sales to be announced.”
Corn futures for December delivery rose 6.5 cents, or 1.8 percent, to $3.71 a bushel on the Chicago Board of Trade, capping the first four-day gain since mid-April. The grain rose 3.2 percent for the week, the largest such gain for the contract since April 30.
China may have planted as much as 3 percent fewer acres this year, after rain, snow and cold weather last month encouraged farmers to switch to green beans, sunflowers and other crops, Yishan said after members of the industry-funded U.S. Grains Council traveled more than 1,864 miles (3,000 kilometers) earlier this month to examine planting conditions.
Corn inventories in China may be 15 percent smaller than last year, and the quality of last year’s crop has declined because of mold problems in storage facilities, Yishan said in the report.
“The consensus is that Chinese supplies are tight and that they will require more imports,” Thomas Dorr, the president and chief executive officer of the U.S. Grains Council, said in a telephone interview. “Demand for high-quality protein including meat, milk and eggs is growing very substantially in China.”
Corn is the biggest U.S. crop, valued at $48.6 billion in 2009, government figures show. The U.S. is the biggest user of the grain.
To contact the reporter on this story: Jeff Wilson in Chicago at jwilson29@bloomberg.net
