.floatimg-left-hort { float:left; } .floatimg-left-caption-hort { float:left; margin-bottom:10px; width:300px; margin-right:10px; clear:left;} .floatimg-left-vert { float:left; margin-top:10px; margin-right:15px; width:200px;} .floatimg-left-caption-vert { float:left; margin-right:10px; margin-bottom:10px; font-size: 12px; width:200px;} .floatimg-right-hort { float:right; margin-top:10px; margin-left:10px; margin-bottom:10px; width: 300px;} .floatimg-right-caption-hort { float:left; margin-right:10px; margin-bottom:10px; width: 300px; font-size: 12px; } .floatimg-right-vert { float:right; margin-top:10px; margin-left:10px; margin-bottom:10px; width: 200px;} .floatimg-right-caption-vert { float:left; margin-right:10px; margin-bottom:10px; width: 200px; font-size: 12px; } .floatimgright-sidebar { float:right; margin-top:10px; margin-left:10px; margin-bottom:10px; width: 200px; border-top-style: double; border-top-color: black; border-bottom-style: double; border-bottom-color: black;} .floatimgright-sidebar p { line-height: 115%; text-indent: 10px; } .floatimgright-sidebar h4 { font-variant:small-caps; } .pullquote { float:right; margin-top:10px; margin-left:10px; margin-bottom:10px; width: 150px; background: url(http://www.dmbusinessdaily.com/DAILY/editorial/extras/closequote.gif) no-repeat bottom right !important ; line-height: 150%; font-size: 125%; border-top: 1px solid; border-bottom: 1px solid;} .floatvidleft { float:left; margin-bottom:10px; width:325px; margin-right:10px; clear:left;} .floatvidright { float:right; margin-bottom:10px; width:325px; margin-right:10px; clear:left;}
Iowa’s corn farmers have watched the commodity’s price sag this year, but they received some good news last week when the U.S. Grains Council said China might buy more than 1 million metric tons in the next 18 months. That’s at least 40 percent more than that country has bought from the United States since April.

“In six to 18 months, the Chinese will undoubtedly take more than a million tons of corn, and I wouldn’t be surprised to see it be in fact double that amount,” as the nation’s economic growth boosts demand for meat and feed grains, said Thomas Dorr, president of the council.

China, the world’s second-largest corn consumer, has purchased at least 715,000 tons of corn for delivery by Aug. 31, according to U.S. Department of Agriculture (USDA) data. China was a net corn exporter until last year. When a purchase of 115,000 tons was announced in April of this year, it was the first such purchase since at least January 2009, according to USDA data.

Rising imports by China may help drain excess supply, ending an 8.8 percent slump in Chicago futures this year.

The additional purchases “will have a big impact on the global demand balance for corn,” said Toshimitsu Kawanabe, an analyst at Tokyo-based commodity broker Central Shoji Co., who predicted that the latest deal might push the price for corn for December delivery to $4 per bushel. Iowa corn prices stood in the $3.20-$3.36 range last week.

U.S. corn inventories will fall to the lowest level since 2007 on higher demand from ethanol producers, the USDA said June 10. The department also trimmed its prediction for the world corn stockpile at the end of the 2010-2011 year by 4.5 percent from last month.

“There is evidence that (China’s) demand for high-quality proteins is going to require added energy for livestock rations, and we believe it’s an excellent opportunity for the U.S. to provide those corn supplies as needed,” Dorr said.

The World Bank forecast on June 9 that China’s gross domestic product will expand 9.5 percent this year, compared with 3.3 percent for the United States and 0.7 percent for the euro region. The Asian nation’s demand for corn may grow 2 percent in the 2010-2011 season, compared with a year earlier, according to the USDA.

China’s corn imports may be as much as 3 million tons this year, as it rebuilds stockpiles drained to help cool domestic prices, said Jay O’Neil, an agricultural economist at the International Grains Program of Kansas State University. That’s three times the USDA forecast for China’s imports.

The acreage planted in corn in China is at least 2 percent lower than expected “due to abnormal rains, snow and temperatures this spring,” the council said on its website last week, citing its crop tour in the northeastern part of the country.

“We could see imports of close to 2 million to 3 million tons if the crop situation there deteriorates further,” O’Neil said, drastically raising his April estimate of 500,000 tons.

China sold about 4.67 million tons of corn in weekly auctions from April 13 through May 25 to cool domestic prices, according to data compiled by Bloomberg.

“The market is wondering if the crop outlook will motivate the Chinese government to step in and, via importing, replace domestic reserve corn stocks that have been released and sold recently in an attempt to control inflation,” said O’Neil, who advises the council. He traveled to China with the council in March to meet local traders and assess the potential for imports.

Corn stockpiles in China’s Heilongjiang and Jilin provinces have slumped more than 15 percent, and “supplies show significant signs of degradation,” with as much as 30 percent of the grain in some storage facilities affected by mold, the council said recently.

Corn supplies in northeastern Jilin province, China’s top producer, may be facing damage from mold because of high temperatures, Sina.com reported on June 10, citing industry website China Corn.

“Moldy corn can be a problem in stored grain since it is likely” to spread, Mike Callahan, senior director for international operations at the grains council, said in a separate e-mail to Bloomberg. “If the mold spores produce mycotoxins, then this can become a serious issue in certain livestock species like poultry and swine.”

Moldy corn can be used if mixed with better quality corn and “the negative effects of certain mycotoxins can be somewhat countered by the use of binding and detoxification products,” Callahan said.