China will release a total of 1.08 million tonnes of corn from state reserves on April 13 in an effort to cool rising domestic prices, which have risen high enough to attract imports. The large state sales are likely to dent domestic prices and discourage feed mills in the south from sourcing cheap corn, particularly from the United States, the largest exporter.
Some feed mills have been inquiring about US corn prices over the past week after tight domestic supply pushed domestic prices as much as $40 per tonne above US corn, traders said. Of the total sales, 500,000 tonnes would be released from state stocks in three major growing provinces in the north-east, where prices rose to record high levels partly driven by Beijing's stockpiling programme, an official announcement said.
The sales in the northeast were the first since December when Beijing suspended auctions in the area, aiming to shore up prices and boost farmers' incomes after the harvest. The rest, 580,000 tonnes, will be sold in provinces including Guangdong and Jiangsu in the south and east, according to the document posted on the website of the National Grain & Oil Trade Centre (www.grainmarket.com.cn). On Friday, the most-active corn contract at the Dalian Commodity Exchange was traded slightly lower and closed at 1,903 yuan ($278.9) per tonne.