In September, the Chinese government began releasing corn from government reserves into the market and has reportedly released approximately 3.7 million metric tons (145.7 million bushels) to date. Releases were accomplished through normal sales channels rather than a public bid process.
According to the U.S. Grain Council, this may reflect an attempt to monitor sales volumes more tightly due to concerns regarding actual stock levels. Chinese market insiders also suggest China may restrict new crop corn procurement by the main buyers in Northeast China this year.
Industrial processing companies and possibly small feed mills and livestock farms are likely to be the first sectors affected, followed by large enterprises like COFCO and the China Grains & Logistics Corporation (CGLC). Finally, large grain enterprises could see restrictions on purchase volumes, and bank lending for some large buyers could be tightened.
Meanwhile, Zhang Xiaoqian, vice director of China’s National Development and Reform Commission (NDRC), said China is likely to use its huge foreign exchange reserves to buy staple commodities as needed. That could mean more U.S. commodity sales as the U.S. dollar appreciates and commodity prices fall, according to the Shanghai JC Intelligence Co., Ltd, an agricultural market analysis firm.