March 12, 2013 / 5:01 AM / in 5 years

UPDATE 1-China buys more U.S. corn; top feed producer wants import curbs eased

(Recasts top two paragraphs)

* China buys more U.S. new crop, totalling about 600,000 T

* Large buyers and state-owned COFCO, Sinograin on hold

* China’s top animal feed producer wants import curbs eased

By Niu Shuping and Lucy Hornby

BEIJING, March 12 (Reuters) - China has added to purchases of the U.S. corn crop that is due to be harvested after September, taking total orders since February to about 600,000 tonnes, traders said.

Private animal feed mills, which had already bought 240,000 tonnes in late February, purchased the additional cargoes in response to relatively high domestic prices in China, the world’s second-largest corn consumer.

Traders said large buyers, such as state-owned COFCO, are holding back from big purchases as they wait for U.S. corn prices to fall further, while Sinograin, the manager of China’s state reserves, may also turn to the United States after its domestic restocking programme ends on April 30.

Sinograin is currently buying only from the domestic market, but it bought more than 6 million tonnes of U.S. corn in late 2011 and early 2012 to replenish low state reserves.

The Chicago Board of Trade December corn futures contract , which tracks the crop harvested this fall, lost 7.1 percent over the first two months of 2013, in the second worst winter performance for the new crop contract in a decade.

But the declines have failed to dent growers’ enthusiasm for planting the feed grain this spring, said farmers in the United States, the world’s largest corn exporter.

Sinograin has not been restocking at full tilt because domestic prices are hovering above government-set stockpile prices, company president Bao Kexin told reporters last week on the sidelines of the annual parliament session, but declined to give details.

The stockpile plan will end on April 30, and Beijing has set a price of 2,100 to 2,140 yuan per tonne, but physical prices <0#ASCORN-CN> in the northeast reached as high as 2,260 yuan per tonne on Tuesday.

Bao also declined to say whether the company would continue to import corn this year, adding that such decisions require government approval. State stockpiles are higher now than last year.

“We expect Sinograin will import again this year if it cannot buy enough at home. U.S. new corn prices are very cheap and attractive for the company,” said one corn trader.

U.S. pre-tax corn prices were about 23 percent below domestic rates in the port city of Shenzhen. Even with import and value-added taxes included, the U.S. new corn price is about 14 percent lower.

New Hope Group, China’s largest producer of animal feed, urged Beijing to issue more corn import quotas to benefit pig breeders and meet rising demand for animal protein as more people move to urban centres.

“For feedgrains of soy and corn, control over imports should be relaxed, or if necessary, more import quotas should be issued or even the quota restriction scrapped,” Liu Yonghao, chairman and founder of the group, told reporters on the sidelines of annual parliament session.

China, the world’s largest soy importer, buys about 60 percent of globally traded soybeans.

Traders do not expect Beijing to lift corn quota curbs soon, but the government may be willing to issue more quotas to state-owned firms under its World Trade Organisation obligations.

China sets its annual corn import quota at 7.2 million tonnes, 60 percent of which is allocated to state firms.. China imported 5.2 million tonnes of corn in 2012, a record, but imports remain only a small part of the total, amounting to about two weeks of domestic consumption. (Editing by Clarence Fernandez)

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