U.S. confirms biggest corn sale to China since 2001

By K.T. Arasu

CHICAGO (BestGrowthStock) – China bought 369,000 tons of U.S. corn, the Agriculture Department said on Thursday, confirming the second big sale of U.S. corn to China since late April and the single largest purchase by Beijing since 2001.

Chicago Board of Trade May corn futures, up more than 6 percent since the first purchase of 115,000 tonnes was confirmed on April 28, fell 5-1/4 cents to $3.66-1/2 a bushel on Thursday. The sales were already factored into the market.

The purchases by China, the world’s second-largest corn consumer after the United States, come at a time when Beijing has been selling reserves to tamp down rising prices.

Traders and analysts said the purchases were primarily for feedmakers in China, adding there has been no sign yet that the Chinese government was building state stockpiles.

“What we have now is ad hoc purchases by feedmakers,” said grains analyst Dan Basse of research company AgResource Co in Chicago, adding that any purchases by China to build its reserves could lend a bullish tone to CBOT corn futures.

Traders and analysts polled by Reuters estimated imports in the 2009/10 (Aug/Sept) and 2010/11 marketing years to range from 700,000 tonnes to 6 million tonnes.

The April 28 purchase was the first by China in nearly four years. There has been speculation that China has bought as many as 15 cargoes of U.S. corn, totaling 825,000 tonnes to 900,000 tonnes.

U.S. Agriculture Secretary Tom Vilsack told Reuters the purchases of U.S. corn by China showed signs of improving trade ties between the two countries.

“I think it’s an indication of a strengthening trade relationship and an understanding that we got a quality product at an affordable price, which is what trade is all about,” he said. The recent purchases are “reflective of our efforts to try and improve trade opportunities,” he said.

The two countries went through a rough patch, with quarrels in January and February over Chinese Internet censorship, trade disputes, U.S. arm sales to Taiwan and President Barack Obama meeting with the Dalai Lama, the exiled Tibetan leader.

“START OF SOMETHING”

“Everybody is trying to determine is this just the start of something or is this just getting extra supplies around them a little bit to psychologically cool their prices,” said Don Roose, analyst with U.S. Commodities in West Des Moines, Iowa.

Chicago Board of Trade corn futures have been invigorated by China’s purchases, which some traders have described as a “game changer” amid prospects for continued sales to Beijing.

Of the total 369,000 tonnes, USDA said 239,000 tonnes were for delivery during the 2009/2010 marketing year and 130,000 tonnes for delivery during 2010/2011.

Any sale of 100,000 tonnes or more must be reported to the USDA by the next day.

The department also announced export sales of 174,000 tonnes of corn for delivery to unknown destinations, which some traders speculated could be for China.

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(Additional reporting by Mark Weinraub and Sam Nelson in Chicago, and Christopher Doering in Washington; graphics by Gavin Maguire; Editing by David Gregorio and Lisa Shumaker)

U.S. confirms biggest corn sale to China since 2001