China likely to reject US shipments of corn after unapproved GMO find

China, one of the world’s largest corn importers, is likely to reject more US shipments of the grain after they were found to contain a genetically modified variety not approved by Beijing, traders said yesterday.

This view has sparked fears that other cargoes could be turned away, with some traders and buyers warning that uncertainty over the discovery could prompt a sharp decline in Chinese orders for US corn.

“We are completely lost and have no idea how to deal with the situation,” said one executive with a major animal feed mill.

“Not all corn cargoes were blocked for entry, but it is a messy situation.”

An initial US corn cargo was rejected last month due to the discovery of the same variety, Syngentas Agrisure Viptera, at a time when US corn exports to China have been soaring as Beijing grapples with record-high domestic corn prices and rising demand for food.

Traders have said that the variety, also known as MIR 162, is set to be approved by China soon. It is already shipped to destinations such as top corn importer Japan, South Korea and the EU.

Slowing Chinese demand would drag further on global prices that have dropped around 40% so far this year on expectations of a bumper US harvest. Chicago Board of Trade December futures eased on Tuesday in Asia.

One cargo of about 60,000 tonnes in the southern province of Fujian was found to be tainted with MIR 162, traders said.

The same GMO strain was found in another 49 containers, equivalent to 1,225 tonnes, at the port of Shenzhen. Shenzhen’s quarantine authority last month rejected one cargo of the grain from the US containing MIR 162.

“Since this is the same GMO in the latest discovery, the shipments may have to be blocked for entry,” said one trader.

Quarantine officials at Fujian, Shenzhen and Beijing declined to make immediate comment.

Buyers said that they were unlikely to place new orders while shipments were in danger of being rejected.

“The latest discovery is bad news for some buyers... and will slow imports,” said Li Qiang, chief analyst with Shanghai JC Intelligence.

Some US exporters have been in talks with Chinese buyers over possible delays in existing orders in the wake of the first GMO discovery, the China National Grain and Oils Information Centre said.

The official think-tank earlier estimated China’s corn imports this month would be 1.75m tonnes.

China is expected to import a record 7m tonnes of corn in the 2013/14 (Sept/Aug) marketing year, up from 5.23m tonnes the previous year, according to the US Department of Agriculture.

The US supplied 94% of China’s corn imports in the first 10 months of 2013.

China allows imports of 25 different GMO corn varieties and is considering adding other commonly cultivated kinds to the list, including Agrisure Viptera. Designed to offer enhanced protection against crop-damaging insects and widely grown in the US, it was expected to get the green light later this year or in 2014.

A bulk corn shipment from Argentina was cleared for import earlier this year despite it containing traces of MIR 162.

The latest possible rejection comes as Beijing gets into full swing stockpiling its domestic corn harvest in the major growing provinces in the northeast, aiming to shore up domestic prices and help farmers.

Beijing is offering subsidies to feed mills in buying domestic corn due to tight storage capacity. Domestic demand has been weakening, while the country, the world’s second largest corn consumer, is expected to harvest a record crop this year.

Government stockpiles are expected to double to around 60m tonnes in 2013/14 — nearly 30% of the country’s annual consumption.

China turned into a net corn importer in 2011 as domestic production failed to meet rising demand driven by more meat consumption as the country urbanises.

The US historically is the world’s top supplier of corn, exporting between 10% and 20% of its harvest each year.

— Reuters


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