BEIJING: China, the world's biggest agricultural products consumer, has swooped in to import copious amounts of corn and soy products from the United States and elsewhere this week, taking advantage of the slump in global prices to replenish its dwindling state reserves.
The large orders for corn, soybeans and soyoil underlines China's explosive appetite for grains and adds to growing evidence its corn imports could well exceed government forecasts this year.
China Grain Reserves Corp., or Sinograin, which manages the country's state reserves, booked purchases of about 1.5 million tonnes of corn on Tuesday, with supplies coming from either the US or Argentina, for state reserves, traders said on Wednesday.
Meanwhile, it also bought 100,000-120,000 tonnes of soyoil from Brazil and 700,000-800,000 tonnes of soybeans from United States for state reserves, several traders told Reuters.
Sinograin is looking for a total of up to 2 million tonnes of soybeans and up to 700,000 tonnes of soyoil to refill state reserves as it rotates out the old stocks, they said.
The deal was the latest as Beijing is trying to refill its low state reserves and tame record domestic corn prices, which have driven up the country's food prices.
High food price is a major factor in pushing China's consumer price inflation to 6.2 percent in August, nearing a three-year high of 6.5 percent seen in July.
"Sinograin bought the volume largely from two companies and a bit from others, altogether it was about 1.5 million tonnes for shipment from March to May," said one trading manager with an international trading house in Beijing.
He said the origins of the supply could be either from the United States or Argentina. Another corn trader with a domestic trading house also confirmed the volume.
Argentina had said it would sign a deal with China next month that would clear the way for its corn exports. .
Chicago Board of Trade corn prices rose more than 6 percent on Tuesday to hit limit up, supported by talk of fresh purchases by China.
SMART MOVE TO BUY AS PRICES TUMBLE
"Increasing (state food) reserves will be a long-term strategy for China, and it's really a smart move to buy as prices tumble," said Xiao Jun, an analyst with grain commodities consultancy firm Shanghai JCI.
Sinograin's recent purchases showed that "China's buying model is more flexible and more scientific, and it will buy more if prices are attractive," he added.
"It is a very good buying opportunity as US is forcing China to appreciate its yuan. (The purchases) can help to control local inflation while at the same time taking usage of the large forex reserves effectively," said a trader with Heilongjiang Jiusan Oil and Fat Co., a major domestic soybean crusher.
Beijing had set aside funds to buy between 9 million and 10 million tonnes of corn overseas to refill state reserves, which have been falling to their lowest levels in years after sales over the past two years, a senior industry analyst said earlier this year.
US Grains Council expected a few months ago that China will import up to 5 million tonnes of corn in 2011.
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