China books record deal for US corn, stepping up buying spree

China made its biggest purchase ever of U.S. corn in another boost to meeting agriculture targets in the first phase of a trade accord.

The U.S. Department of Agriculture said Tuesday that exporters sold 1.762 million metric tons of corn, the fourth-biggest spot deal ever for the grain. The agency on July 10 reported a sale of 1.365 million tons to China.

China is poised to meet or surpass import quotas set by the World Trade Organization for 7.2 million tons of corn from any country in a year. Beijing issued a new batch of permits that allow imports at lower tariffs. The Asian nation agreed to buy $36.5 billion in agricultural commodities this year from the U.S. as part of a trade accord, up from $24 billion in 2017.

China’s imports of other raw materials from crude oil to soybeans surged in June as the economy started to recover from the worst of the virus.

In the U.S., virus cases are rising, and commodity markets are under pressure from limited demand for food and fuel. The huge export sales have a more modest impact on corn futures than normal with grain inventory rising faster than consumption.

“China would need to buy five times this amount just to get us close to the carryover we currently have,” said John Payne, a senior futures and options broker at Daniels Trading in Chicago. “This is a positive development, though.”

Corn futures for September delivery were unchanged at $3.2875 a bushel at 9:48 a.m. on the Chicago Board of Trade. The contact slumped 5.7% in the previous two sessions.

Sinograin, which handles China grain inventory, sent a team to the northeastern city of Zhaodong in Heilongjiang province on July 12 to investigate quality issues related to local corn reserves.

The three biggest U.S. corn export sales: 3.72 million tons in January 1991 and 2 million in October 1989, both to the former Soviet Union, and 1.86 million to unknown destinations in July 1979.