Chinese Private Importer Buys U.S. Corn
U.S. corn now more competitively priced to take advantage of China's tariff rate quotas.
Compiled by staff
Published: May 29, 2006
Up until recently China's private sector hadn't purchased U.S. corn because it wasn't economically feasible. That changed last week when Xiwang Sugar Holdings Co. Ltd., a private tariff rate quota holder, purchased 50,000 metric tons of U.S. corn.
In the past, China's state trading enterprise, China National Cereals, Oil & Foodstuffs Corp., was singly responsible for all corn imports into China. Currently the minimum access requirement, or TRQ, is 7.2 million tons (283.4 million bushels) for corn under China's World Trade Organization accession agreement.
"China's accession package dictates that 40% of the TRQ volume is distributed annually to the private sector with the remainder going to state trading enterprises," explains Kevin Natz, U.S. Grains Council director of trade policy. "Now that U.S. corn is competitive, the private sector is starting to exercise their ability to import."
Xiwang Sugar Holdings Co. Ltd. is one of the largest producers of glucose in Asia and used between 900,000 and 1 million tons (35.4 -39.3 million bushels) of corn last year. Xiwang has a TRQ of 100,000 tons (3.9 million bushels) for 2006, an increase from 51,000 tons (2 million bushels) in 2005.
The U.S. Grains Council anticipated that the first big buyers of U.S. corn would be industrial processors since their purchasing needs are larger than most feed millers. Additionally, processors have wider profit margins, thus making them less sensitive to price. "Shandong Province is running short on corn," says Todd Meyer, USGC senior director in Beijing. "This province is vital to the balance of corn in China."
The first shipment of U.S. corn by Chinese importers received formal import approval just a few weeks ago from China's General Administration of Quality Supervision, Inspection and Quarantine. That shipment moved from Hong Kong to Guangdong to be off loaded the week of May 17. The USGC Beijing office reported that this was part of a two-container shipment totaling 210 tons (8,267 bushels).
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