Argentina in talks over corn exports to China

Argentina, the world’s second- largest corn exporter, is in talks with China on a so-called sanitary protocol that would allow it to export the grain to the Asian nation, according to the Ministry of Agriculture.

The South American country expects to speed up discussions with China next year to become an alternative supplier, it said in a statement Nov. 12, without giving further details. China’s Minister of Agriculture Han Changfu held talks with his counterpart Julian Dominguez on Friday in Argentina.

China, the second-biggest corn consumer, has bought about 1.5 million tons of the U.S. grain this year, the most since about 1995, as the government sought to cool domestic futures prices that gained 36 percent in the past year. Prices surged 33 percent in Chicago. China and Argentina have been involved in a range of trade disputes from soybean oil to textiles.

"It’s in both countries’ interests to resume corn trade,” said Li Qiang, managing director at Shanghai JC Intelligence Co., by phone from Shanghai today. China’s imports, including dried distillers grains with solubles, may top 5 million tons in terms of corn equivalent in 2011, Li said.

Argentine farmers will likely harvest a record 26 million tons from the corn crop currently being planted, according to agricultural ministry forecasts. The harvest will take place in the first half of 2011 and is about 70 percent planted, according to the Buenos Aires Cereals Exchange.

Export Quota

The government is yet to announce the size of the export quota. Dominguez said in a statement earlier this month that it may reach 18.5 million tons, compared to 15 million for the 2009-2010 season crop. Dominguez is also scheduled to meet with Chinese officials in Beijing from Nov. 29 to Dec. 1.

The Asian nation halted corn shipments from Argentina because of restrictions on genetically modified imports, the China National Grain and Oils Information Center said today. About 80 percent of the corn crop in Argentina is genetically modified, it said, without elaborating.

The two countries need to work out a “phytosanitary agreement,” said Li from Shanghai JC. “The earliest possible outcome is the middle of 2011,” he said.

Corn futures rose 11.25 cents, or 2.1 percent, to $5.5925 cents a bushel as of 9:33 a.m on the Chicago Board of Trade.