Monday, July 7, 2014

Auctioning Imported Reserve Corn

Chinese authorities are auctioning off old imported corn from their "temporary reserve" stockpile. The corn--bought from the U.S. several years ago--is attracting attention because of its price and quality.

China began importing significant volumes of corn in 2010, but a lot of it was locked away in warehouses to bolster reserves. The 1.57 million metric tons (mmt) imported in 2010 mostly went into state reserves but has already been sold off and replaced. The nearly 1.7 mmt imported in 2011 at a cost of over 2200 yuan/metric ton also was placed in reserves and is now up for auction. The price is said to be about 300 yuan/metric ton less than domestic corn and similar to the price of imported sorghum. The imported corn is said to be attracting interest mainly from feed mills.

Much of China's domestic corn supply is stockpiled in northeastern provinces. It can't be sold because its sale price has to exceed the price paid for the corn. New imports of corn and DDGS are mostly blocked by the MIR162 variety non-approval.

The auctions of old imported corn from reserves are being held in southern provinces Guangdong, Hunan and Jiangxi. The volume is relatively small and the auctions are far enough from the northeastern region that it won't put downward pressure on northeastern corn prices. The auctions also inject some corn into thirsty commercial channels and might also be intended to slow sorghum imports.

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