BUENOS AIRES (MarketWatch) -- Argentina and China are close to a deal that will open up corn exports to the Asian giant, according to Martin Fraguio, head of the Maizar corn growers' association.
Some progress was made in establishing phytosanitary standards during last week's visit by a Chinese trade mission and an accord will likely be in place within a month or two, Fraguio told Dow Jones Newswires on Monday.
The vast bulk of Argentina's corn comes from transgenic crops not yet cleared for sale in China.
China has historically been a major corn exporter, but a drought last season and soaring demand have turned China into an importer. China's agriculture minister visited Argentina in November and pledged to work toward opening up the Chinese market to Argentine corn.
The possibility of Argentine corn going to China dented U.S. corn futures last year on fears that U.S. farmers might lose business to Argentina.
The Agriculture Ministry has forecast corn production for the 2010-11 season at 20.9 million metric tons. Though it's expected to be 10% lower than last year's harvest, it would still one of the largest crops on record.
Argentina's government tightly controls wheat and corn exports, only clearing shipments once domestic supply has been set aside.
Argentina is the world's second-largest corn exporter behind the U.S., exporting almost 18 million tons of corn in calendar year 2010. Last year, the top buyers included Iran, Algeria, Colombia, Malaysia and Egypt.
So far this year, Argentina's government has cleared 11 million tons of corn for export, and estimates domestic demand at 8 million tons.
While China has expressed interest in buying corn from Argentina, trade relations between the two countries have been strained since early last year. China has sporadically stopped buying Argentine soyoil in a move widely seen as retaliation for Argentina's import barriers against Chinese manufactured goods.
Last week, China's Commerce Minister Chen Deming visited Buenos Aires and reached an agreement to buy 600,000 tons of Argentine soyoil this year, according to the Agriculture Ministry.
China was the biggest buyer of Argentina's soyoil up until early 2010, when it stopped imports. Argentina, the world's largest soyoil exporter, accounted for just 12% of China's soyoil imports last year, a sharp drop from 77% in 2009, according to Chinese customs data.