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Asia grain: China corn sales up, but many covered

SINGAPORE: Bouyant Chinese corn sales may slow as many Asian buyers have covered nearby positions and it remains unclear when Beijing will join the WTO and scrap export subsidies, traders said on Friday.

"Buyers are scared to buy too much for the late shipments," said a trader. "For the nearby, what do you have? Koreans are getting covered. Open demand is for July shipment."

Analysts in the United States expect the U.S. Department of Agriculture to revise upwards later on Friday its estimate of China corn exports for the year to end September to seven to 10 million tonnes, from the current forecast of five million tonnes.

With corn stocks seen swollen to 50-70 million tonnes, China had been an aggressive seller in Asian markets.

South Korea, its biggest client, had sealed deals for more than two million tonnes since the start of the year.

LARGE CHINA SALES SEEN

In the latest spree since late January, some traders said Chinese exporters had sold between two and three million tonnes to foreign traders for shipments from March to September.

"China is out and selling," said another trader, adding the deals shortly before the Lunar New Year might total as much as four million tonnes. Despite a rally in Chicago since early January, Chinese exporters continued to offer a small discountfrom an official export price of $100 per tonne fob China, traders said.

Some said Chinese corn was still available for $98, fob China, compared with $118/$119, c+f Southeast Asia for U.S. corn.

Traders estimated the latest deals would raise Chinese corn sales so far this year to four to five million tonnes, with about half destined for South Korea and the rest to Southeast Asian countries, such as Malaysia.

TRADERS EYE CHINA, WTO

With South Korea covered for the first half of 2000, there were few nearby positions left open for Asian corn consumers.

Traders said Japan and Taiwan usually buy U.S. corn, for quality and political reasons, respectively. Though South Korea had yet to buy for the third quarter, some traders were reluctant to commit themselves to a huge amount of Chinese corn for distant shipments amid uncertainty over China's entry to the World Trade Organisation (WTO).

In an accord with Washington, Beijing had promised to eliminate export subsidies for agricultural products, including corn, when it joins the WTO, possibly later this year. Some traders said Washington also planned to persuade China to scrap export subsidies on its entry into the trade body for sales contracts signed before the date.-Reuters