KANSAS CITY, MISSOURI, U.S. — Although the May corn futures contract turned modestly lower on profit-taking and a stronger dollar in April 25 activity at the Chicago Board of trade, market participants took note of several early headlines about export sales to China for both this crop year, ending Aug. 31, 2012, and the 2012-13 crop year.
“Every time old-crop CBOT corn dips down to about $6, China comes in to buy, and every time new-crop corn trades around $5.35-$5.50, they seem to buy,” said Paul Meyers, vice-president of commodity analysis at Foresight Commodity Services in Long Valley, New Jersey, U.S. “China has already bought more old-crop corn this year than the U.S. Department of Agriculture (USDA) has predicted, which was 4,000,000 tonnes. With purchases this week, they are already up to 4,800,000.”
The USDA said on its 24-hour reporting service on April 25 that China had purchased 90,000 tonnes of corn for the 2011-12 crop year. It also reported private sales of 172,500 tonnes to China for delivery in the 2012-13 crop year, as well as 420,000 tonnes of corn sold to an unknown destination, thought by market participants to be China.
Meyers said the May 10 USDA World Agricultural Supply and Demand Estimates, showing corn production in all countries, is likely to forecast a record corn crop in China in 2012-13. Despite that, he said, China’s appetite for U.S. corn has grown massively this crop year, especially when compared to the 2010-11 crop year, when China imported only 979,000 tonnes of corn. He said China may be building up reserves this year, as well as using the majority for feed corn. He added the healthy levels of import demand are in sync with the ongoing expansion of a middle-class in China, who desire higher protein foods in their diet.