Dec. 30 (Bloomberg) -- China, the world’s second-biggest corn grower, will allow 500,000 metric tons of the grain to be exported next year, about 10 percent of levels seen in previous years, as the government seeks to ensure domestic supplies.

Cofco Ltd., Jilin Grain Group Co. and three smaller companies received export permits, said three people familiar with the matter, who declined to be identified as the matter is confidential. That amount is worth about $73 million at current prices. More permits may be issued later in the year if the government deems it necessary, they said.

China, which earlier was considering allowing as much as 5 million tons to be exported, had been expected to issue fewer permits to control prices and ensure domestic supplies. The 500,000-ton quota is less than 1 percent of world corn trade and unlikely to erode U.S. sales into the Asian market.

“This is much, much less than what the market has expected: it amounts to nothing,” said Nie Ben, manager at Shanghai Continent Futures Co., by phone from Dalian. “Still, the current prices dictate whether permits are issued or not, we won’t see immediate exports.”

China exported over 5 million tons of corn in 2006/07, according to U.S. Department of Agriculture. By comparison, Chinese corn exports plunged 96 percent to 210,000 tons between January and October, according to customs data, after the government stopped issuing export quotas in order to increase domestic supplies. The USDA in November forecast Chinese corn exports in 2008/09 at 500,000 tons.

Little Impact

The permits will likely have little impact on domestic or international corn markets due to the relatively small quantity and the lack of any favorable terms given to exporters, the executives said.

Corn shipped from the U.S. to South Korea, previously China’s main export market, is still $40 per ton cheaper than Chinese shipments, so no immediate sales from China are expected, the people said.

Beijing-based Cofco, Changchun-based Jilin Grain are each allowed to export 150,000 tons, a company affiliated with Heilongjiang province received 100,000 tons, while state-backed firms in Inner Mongolia and Liaoning each got 50,000 tons, the people said.

Calls to Cofco and Jilin Grain were not immediately answered.

China’s corn harvest may rise to a record 156 million tons, helped by favorable weather and increased planting, the China National Grain and Oils Information Center said Dec. 10.

To contact the reporter on this story: William Bi in Beijing at wbi@bloomberg.net

Last Updated: December 30, 2008 07:28 EST