China Xiwang Sugar Holdings Co Ltd said yesterday it had obtained government approval for US corn imports, which signalled that Beijing would no longer stand in the way of the grain's trade.

A manager from Xiwang, one of the mainland's top corn sweetener producers, told Reuters it had received the certificate for imports of 50,000 tons of genetically modified (GM) corn.

The company, based in East China's Shandong Province, placed the order for a full boat-load of corn in May, marking the mainland's first major corn imports in years.

"We have already received permits from the quarantine authority in Beijing," said the Xiwang manager, who declined to be identified.

He said the supplier would start loading US corn in the coming days for arrival at the end of July or early in August.

Many in the corn market were watching if Beijing would allow the imports. They saw more potential trade as domestic corn prices have been high, particularly in Shandong, due to rising demand from the corn processing industry.

The Chinese mainland, one of the world's top corn exporters only a few years ago, is expected to become a net importer of the grain possibly as early as next year.

"We can see there are no restrictions from the political side. Now the only thing is the market," said an industry source based in Beijing, who declined to be named. "If the prices are good, they will buy more."

Xiwang had said in May that if all went well with the first cargo, it would buy a second cargo before the domestic crop harvest starting late in September.

Yet the manager declined to comment whether it would go ahead with the purchase of the second cargo, or had already done so.

The industry source and other traders said they had seen many inquiries for corn from both corn processors and feed mills.

The mainland buyers, however, were hesitant to follow suit at present. A Chicago rally pushed up US corn prices to above US$150 a ton, compared with US$145 Xiwang paid for the first cargo. Domestic corn prices have turned soft this week.

"I don't think they can do. Prices are too high. There's been a sharp rally in Chicago. Freights are also going up," said another trader at an international grain house in Beijing.

Domestic corn prices came under pressure after the State-owned think tank said on Monday 2006 that the corn output was likely to rise 1.9 per cent to a record 142 million tons.

China National Grain and Oils Information Centre (CNGOIC) said corn acreages climbed 2.1 per cent due to a shift from soybeans in the major corn growing Northeast China.

"The price fall is normal in July and August as grain firms step up sales before the new harvest. But prices will be back to a high level from September," said one analyst at the centre.