U.S.'s Sixth-Largest Export Sale of Corn on Record May Be Heading to China

U.S. exporters sold 1.25 million metric tons of corn to unknown destinations, the sixth-largest daily sale of the grain, according to the U.S. Department of Agriculture. Analysts said the buyer may be China.

The sale includes 1 million tons for delivery in the 2010-2011 marketing year that began Sept. 1, and 250,000 tons for the 2011-2012 season, the USDA said today in a statement. The U.S. is the world’s largest grower and exporter of corn, a grain used mostly as livestock feed.

China, the biggest hog producer and pork consumer, became a net importer of corn last year for the first time since 1995, USDA data show. The country also has stepped up purchases of wheat and soybeans this year. Corn prices are at a record in China, and futures traded in Chicago have doubled in the past year as rising global demand eroded inventories.

“We have no way of knowing if this was Chinese business, but the market will assume this sale will be headed to China,” said Roy Huckabay, an executive vice president at the Linn Group in Chicago. The purchase of 1 million tons for the current crop year was “a surprise,” tightening U.S. inventories that the government already estimates will fall to the lowest since 1996, Huckabay said.

China bought 116,000 tons of U.S. wheat in the week ended March 17, the most for any week since a purchase of 128,005 tons in July 2005, the USDA said in a report yesterday. The last time China bought U.S. wheat was 651 tons during the week ended Sept. 30.

Wheat-Buying Surprise

The wheat sale yesterday was a surprise because traders had expected China to buy corn, which jumped to a record price in the northern region this week. Last year, the Asian country became a net importer of corn because of reduced yields from its domestic crop and rising demand from livestock producers as meat consumption increased.

“Today’s announcement should be viewed as confirmation China has begun a corn-importing program that should continue for some time,” Bill Gary, the president of Commodity Information Systems Inc. in Oklahoma City, said in a note to clients today. Gary, who has worked in grain markets for more than a half century, said he expects “large imports during the current season.”

To contact the reporter on this story: Jeff Wilson in Chicago at jwilson29@bloomberg.net

To contact the editor responsible for this story: Steve Stroth at sstroth@bloomberg.net

• Facebook Share
• LinkedIn
• Google +1
• COMMENTS
• Print
• QUEUE