(Bloomberg) -- Chinese customs have asked some traders to limit deliveries of foreign corn into bonded areas in a move aimed at easing domestic oversupply and supporting prices for farmers before the planting season.

Traders use this method to bring in grain at cheaper rates. The country has an official corn-import quota of 7.2 million tons, which benefits from a tariff of just 1%. Above that, cargoes are subject to duties of 65%. However, corn brought into bonded areas can be blended with other ingredients and processed into animal feed, which is then imported at a lower duty.

Local officials are asking traders and processors to keep arrivals below levels the previous year, said the people, who declined to be identified as they are not authorized to speak publicly. Authorities stepped up checks on cargoes and tightened requirements for processors, according to one of the people.

Any move by the top importer to limit deliveries of foreign corn would likely put more pressure on global prices already weighed down by US and Brazilian supplies, and could even lead to washouts in some cases, the people said.

China’s General Administration of Customs did not immediately reply to a fax seeking comment.

Chinese corn futures were little changed on Wednesday after a four-day advance that added more than 2% to prices. 

They are still near the lowest level in more than three years, however, pushed down by surging imports, a bumper harvest, and weak demand from the livestock feed industry. This has prompted government stockpiler Sinograin to step in to buy corn for state reserves to prop up prices.

Imports of corn are likely to rise to 23 million tons in 2023-24 from 18.7 million a year earlier, according to the US Department of Agriculture. 

While the official message to curb flows of foreign corn has been delivered, it is not clear how forcefully it will be implemented, the people said. The plan may be subject to change as the year progresses. 

(Adds China corn prices in sixth paragraph.)

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