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China's Grain and Sugar Import Quotas to Remain Unchanged in 2008

By David Harman
10 Oct 2007 at 09:30 AM GMT-04:00


SHANGHAI (Interfax-China) -- Grain import quotas for 2008 will remain unchanged from this year's level, according to a National Development and Reform Commission (NDRC) statement issued to domestic trading firms yesterday.

Corn import quotas have been set at 7.2 million tonnes for 2008, 60% of which will supply state-owned trading firms. Wheat import quotas have been set at 9.64 million tonnes, 90% of which will supply state-owned firms, and rice import quotas have been set at 5.32 million tonnes, unchanged from this year.




"Not all the corn import quotas were used up last year, despite favorable tax rates for corn imported within the quota system. This was mainly due to international corn prices being higher than domestic prices. In addition, steady domestic corn production in recent years has made trading firms unwilling to import large amounts of corn," a Shanghai Continent Futures Co. Ltd. agricultural analyst, named Yang Fan, told Interfax today.

Corn spot prices in south China's Guangdong Province currently stand at around RMB 1,750 ($232.78) per tonne, ranking the highest in China. In comparison, the CIF (Cost Insurance and Freight) price for corn imported from the United States ranges from $292.65 per tonne to $325.90 per tonne, while the Argentinean CIF price is as high as $345.86 per tonne.

Corn futures closed slightly lower after daytime fluctuations on the Dalian Commodity Exchange (DCE) today, with the most traded 2008 May contract falling RMB 3 ($0.40) to close at RMB 1,661 ($220.95) per tonne after bottoming out at RMB 1,655 ($220.15) per tonne. Turnover is quiet in the spot market at the moment.

"Corn prices are consolidating after the big tumble in previous trading days, and the strong rebound of neighboring soy futures has also supported the corn market," a Daye Futures Co. Ltd. analyst, named Zhang Xiangdong, said.

Wheat futures extended their rally on the Zhengzhou Commodity Exchange (ZCE) on Wednesday, with the most traded 2008 May contract rising 1.30% to close at RMB 2,025 ($269.64).

After a month of downward movement since early September, Zhengzhou wheat futures have finally recovered some ground. Moreover, if the May contract exceeds the resistant 10-day moving average line, it will challenge the target level of RMB 2,060 ($274.30), said commodity analyst Chen Yike from Zhongtian Futures.

Wu Bangyang, a Beijing Orient Agribusiness Consultant analyst, commented that wheat and rice import quotas were also not used up this year, due to successive bumper harvests in recent years.

Sugar import quotas for 2008 will remain unchanged from this year's level of 1.945 million tonnes, according to a National Development and Reform Commission (NDRC) statement issued to domestic trading firms yesterday.

The NDRC commented that 70% of the import quotas will be allocated to state-run enterprises.

"Next year's sugar import quotas will remain unchanged from 2007 levels, and this should be more than enough to meet China's demand, especially considering the potential for the domestic sugar harvest in the 2007/2008 sugar season," a Tonlian Futures sugar analyst, named Li Tiantian, told Interfax today.

According to a forecast quoted by the Ministry of Agriculture, China's sugar output will reach a record 14 million tonnes in the 2007/2008 season, surpassing the 12 million tonnes produced during the 2006/2007 season.

China's annual sugar imports usually linger around 1 million tonnes, which includes around 400,000 tonnes of sugar imported from Cuba due in part to political factors.

Commentary

Domestic demand is picking up with last season’s sales going very smoothly. Unlike the previous season, there was little need for authorities to stockpile excess. This coming season will require further strong growth in domestic demand, and there will be some reliance upon the Olympic factor to help boost sales.

© Interfax-China 2007