Unlikely to pop

19 March 2012 By Wei Gu

Hopes of China becoming a corn importer have fuelled a global rally in corn prices. But traders underestimate Beijing’s will for self-dependence in this commodity. Improvements in pig-farming efficiency and supply-chain bottlenecks will make global corn prices vulnerable.

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Corn prices in China’s Dalian exchange climbed to an all-time high on March 19. The most-active September contract jumped about 2 percent to as high as $390 per tonne, taking gains so far this year to about 10 percent, outstripping a 3.2 percent gain in the global benchmark U.S. corn futures which was trading at $263 a tonne.
China’s National Bureau of Statistics said that farms produced a record corn crop in 2011 of 192 million tonnes. Imports of 3.77 million tonnes of corn in 2011 were the highest since 1993-1994. China will quadruple its purchases of corn, the U.S. agriculture department said in a 10-year outlook.

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