After a slow start this year, Chinese corn exports have gathered pace to cross a million tonnes a month after local governments allocated additional subsidies for overseas sales, traders said on Tuesday. They said some Chinese suppliers were making fresh deals to export corn as low as $127 a tonne, free on board, down from $130 or more this month, following a record 2004 crop of more than 130 million tonnes.
"They are under some pressure to sell more corn," said a trader at an international house. "Two weeks ago, they had problems in logistics. Today, logistics are no longer a problem. Suppliers are more confident. They want to sell more."
Another trader, based in Shanghai, agreed: "Now that the subsidies have been allocated, they can sell. If they can sell at $127, they have small margins."
Traders expect China to ship about one million tonnes in April and the same level in May following exports of 1.1 million tonnes in March. They estimated some 4.5 million tonnes were traded for shipment by end of August since February.
Yet, few buyers were interested in fresh deals, they said. They had enough long positions in Chinese corn, while Argentine corn was regaining a competitive edge in Asia following the recent declines in freight rates.
Argentine corn was seen at below $140 per tonne in South Korea, including costs and freight, compared with $150-$155 from the United States and about $140 from China.
Traders said Chinese corn exports in 2004/05 were heading towards 6-7.5 million tonnes. Exports between September and March totalled 2.19 million tonnes. Their forecast stood well above a prediction of 5 million tonnes for China's 2004/05 exports by the US Department of Agriculture. Exports in 2003/04 stood at 7.55 million tonnes.
"The government wants to help raise farmers' income," said a third trader based in Beijing, who puts the country's corn exports at 7-7.5 million tonnes in the current marketing year. Still, it would stand well below Chinese record corn exports of 15.24 tonnes in the 2002/2003 year.
"It's not that everybody has started to sell. Without subsidies, they cannot do any," the Shanghai trader said, referring to domestic prices in Dalian of about 1,200 yuan ($144.93) a tonne.
The trader added only some local governments were providing subsides for limited amount of exports.
Local government of China's top producing provinces of Jillian and Heilongjiang were allocating 60 yuan ($7.25) and 70 yuan ($8.45) per tonne respectively, in addition to rebates for a 13 percent value-added tax provided by Beijing, traders said.
The government of Loaning province is now considering subsidies, while Hebei had decided against such move, they said.
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