China Shopping for U.S. Corn?

March 12, 2012 01:07 AM

What Traders are Talking About:

* China buying corn? Rumors circulated last Friday that China was actively shopping for (or had purchased) old-crop U.S. corn. Reuters has a story this morning indicating Chinese feed mills are inquiring about two to three cargoes of imported corn after domestic prices recently surged as farmers and trading houses are limiting sales. Asian trade sources say domestic Chinese prices are around $400 per ton, while U.S. corn is currently priced around $325 per ton and Argentine corn is around $320 per ton. Meanwhile, some industry contacts are wondering if the chatter of Chinese purchases is Iranian business as the country struggles to get grain imports amid sanctions from the U.S. and others over its nuclear program.

The long and short of it: If Chinese corn imports are confirmed, it would put a spark in the corn market. But it doesn't appear Chinese interest is as great as rumored last Friday.

* China posts major swing in trade numbers. China had a $31.48 billion trade deficit in February after a $27.78 billion surplus in January. Part of that is a drop in seasonal demand because of slowdowns due to the Lunar New Year holiday, but the trade data came in well below expectations. Compared to year-ago, Chinese imports surged 39.6% last month, while exports were up 18.4%. Traders had expected imports to rise 36% and exports to jump 28.8%.

The long and short of it: The Chinese trade deficit in February was much bigger than anticipated and could be a warning sign of slowed global demand amid the euro-zone financial struggles.

* India (kind of) makes up its mind on cotton exports. Last Monday, India announced it was banning cotton exports indefinitely. Since then, there have been several changes in the "official" stance on India's cotton export policy. The government on Sunday lifted a ban on cotton exports. Today, however, the trade secretary said only sales registered for shipment before the ban was put in place would be given the requisite clearance for export. Some media put that figure at 2.5 million bales, while others say it's 3.5 million bales. No new export certificates will be issued for at least 10 days.

The long and short of it: Not even Indian officials appear sure on what the country's "official" stance on cotton exports is. But it appears there won't be any new export registrations for at least the next 10 days.



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