China, the world's No 2 corn exporter last year, was believed to have bought US corn and could soon be buying up a large amount of wheat from the United States, grain traders and analysts said on Friday.
The world's most populous country, already the top importer of US soybeans, was reported by traders to have bought two to four cargoes of US corn, but it could not be verified.
"It's probably true, it's been talked about so much," one trader said, adding that the sale could lead some of China's corn buyers to also head to the United States for supplies.
"This could be very, very important because it has never really been believed that China would buy (corn), only that they would stop selling," the trader added.
CBOT March corn soared 7-1/4 cents to close at $2.53-1/4 a bushel. March wheat surged 28-3/4 cents to end at $4.05-3/4 after rising the daily 30-cent limit to $4.07. Traders said China had stopped offering corn for export in January and February as it takes stock of feedgrains inventory amid burgeoning demand from its fast growing livestock sector and dwindling stockpiles over the past few years.
Amid the uncertainty over China's exports, it's top corn buyer, South Korea, has recently bought several cargoes of optional-origin supplies for 2004 delivery, traders said. Grains analyst Charlie Sernatinger of O'Connor & Co said there was also talk that some of the South Korean purchases had been nominated to be sourced from the United States.
He was uncertain about Chinese demand in corn, adding that the country had yet to issue low-tariff import quotas for 2004, under its commitment to the World Trade Organisation.
The TRQs must be followed by the issuance of import permits.
Analyst Dan Basse, president of research firm AgResource Company, said China had been making inquiries in the US wheat market.
"They have been kicking tires," he added.
An exporter also said China had been checking US wheat prices, adding that it was leading to expectations China would buy a large quantity of US supplies.
The expectations have also been bolstered by China's state trading company, COFCO, writing to export promotion group US Wheat Associates saying its buying mission to the United States has been reinstated. It did not give a date for the trip.
The trip, originally scheduled for this month, was abruptly canceled after a trade dispute broke out in November when Washington slapped import quotas on Chinese textile. One analyst, who declined to be identified, said he was expecting the trip to come in about two weeks.
China last month signed agreements to buy 1 million tonnes of wheat from Australia and 500,000 tonnes from Canada.
There was talk Australia could have sold more wheat to China.
"There was pricing in wheat by AWB today," a trader said, of the Australian Wheat Board buying CBOT wheat futures.
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