China could turn to overseas markets as it struggles to reduce its ballooning state corn exportsreserves, according to a leading agricultural trader.
Gert-Jan van den Akker, president of Cargill’s agricultural supply chain, told the audience at the FT Commodities Global Summit that there was a “fifty-fifty” chance of China exporting some of its inventories.
China is seen by some analysts to hold as much as 200-250m tonnes of corn in its reserves, equivalent to a year’s worth of consumption. The last time the country exported significant amounts internationally was in the 2006-07 crop year, when it sold more than 5m tonnes.
“[The Chinese] don’t need to export that through corn exports itself,” Mr Akker said, adding the corn could be turned into starch or ethanol before being sold overseas.
The inventories are a result of Beijing’s policy to support farmer incomes, although the government has pledged to eliminate the costly corn stockpiling policy.
The ballooning stocks have masked the strong Chinese demand for grains, meat and livestock feed, according to leading food traders, with international prices remaining subdued amid plentiful supplies worldwide.
“Demand is superstrong,” Gonzalo Ramírez Martiarena, chief executive of Louis Dreyfus Company, told attendees.
The high level of food demand is in stark contrast with the country’s purchases of industrial metals and iron ore. “I am surprised to see the level of demand,” added Mr Ramírez.
Article Source: : SC Agriculture