A1973 U.S. law requiring grain traders to promptly report export sales last week shed light on a mammoth corn sale believed to be destined for China.
The U.S. Agriculture Department announced last Friday the sale of 1.25 million tonnes of corn worth $350 million to an unknown destination, which traders believe is China.
The law requires exporters to report large sales – generally over 100,000 tonnes – within 24 hours and they are made public the next morning.
For days, traders had heard rumours of a large corn sale to China. Corn futures rose 11 per cent after the talk first surfaced.
The U.S. enacted the reporting law in 1973 after the Soviet Union secretly bought a massive amount of U.S. wheat that sent prices soaring. The purchase became known as the “Great Grain Robbery” because the Soviets outfoxed the grain markets.
In July and August 1972, the Soviet trading agency, Exportkhleb, working through six exporters to cloak the size of its dealings, bought 400 million bushels of U.S. wheat worth $700 million – a massive sale for the time – and used U.S. export subsidies to help pay for it.
The purchase depleted already-low U.S. wheat supplies and sent prices soaring when its scope was revealed.