China has given approval to at least two companies to export corn, two sources with knowledge of the matter said, in a radical move by the world’s No. 2 producer to cut its ballooning surplus that could add more supply to a saturated global market.
The move threatens to push U.S. prices down sharply in a market that has already fallen by a quarter since June.
In what could be the first bulk exports in a decade, the government has issued permits to two state-owned companies, top grains trader COFCO Corp and major processor and trader Beidahuang, allowing them to sell corn abroad, said China-based sources who asked to remain anonymous because they were not authorised to speak to the media.
A spokeswoman for China’s commerce ministry said the permits were not their responsibility and directed questions to the state planner, the National Development and Reform Commission (NDRC). The NDRC did not respond to requests for comment.
Unleashing a large amount of corn onto the world market comes at a time when global farmers are growing a record crop.
That could hurt corn growers in major exporters in the United States and Brazil, although more supplies and lower prices would help cut costs for major users in the livestock, ethanol and corn syrup markets.
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