SINGAPORE, Dec 3: Did China really agree to cancel export sales of corn totalling some one million tons as one of the country’s two authorised exporters said?

Is it true that China bought as much as half a million tons of US maize last week as a US government report has shown?

The reports lit a fire under the Chicago futures market on Friday, sending corn prices up sharply on record volumes.

So far nobody can get hold of details and the truth may remain in the hands of those directly involved.

But traders in Asia say one thing is certain — the countdown has begun for China’s entry into the World Trade Organisation (WTO) and the recent events may be among the many hiccups expected as it adjusts to international rules of commerce.

Traders said China would start importing corn into the south next year, though the amount might not be quite as big as the full tariff-rate-quota (TRQ) of 5.85 million tons.

But this does not necessarily mean that China would emerge as a net importer immediately, they said. The country might try to export corn again from the north in the near future, especially as it still has enough stocks.

One would expect southern China to import corn at considerable profit and northern China to export corn with some subsidy from the profits, said a trader based in Malaysia. I think the quantity (of imports) could be substantial.

Many traders were puzzled over the report of the purchase of 500,000 tonnes of US corn as Beijing had not issued any import licences. It also has yet to announce the allocation of TRQs upon its accession to the WTO.

Yet others said one of the Chinese state companies which together should get 68 percent of TRQs for corn imports next year had probably booked the grain in advance as Chicago prices looked low enough for them.

If it is a government buyer, (it is certain that) they will get TRQ, said a trader in Singapore.

It works very easily into south China. Even with the rally (on Friday), there is a least $6 (per ton) in it, the trader added. South of China usually takes from the north six million tons a year. A half a million tons is nothing.

In the export market, traders said China was eager to push out as much corn as possible and was offering discounts. But no shipper would agree on shipment beyond next February as the current subsidies for corn exports were to expire then.

It was increasingly clear that China could not ship out all of the 3.5 million tons sold at a tender in August, they said. As a result, it had to cancel or “wash out” part of the sales.—Reuters