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Published December 16, 2013, 10:19 AM

China rejects more US GMO corn

China has blocked the entry of another U.S. corn cargo, and three more may be turned away, after tests found a strain of unapproved genetically-modified (GMO) corn.

By: Reuters,

BEIJING — China has blocked the entry of another U.S. corn cargo, and three more may be turned away, after tests found a strain of unapproved genetically-modified (GMO) corn.

But some believe the rejection may have been prompted by other trade disputes between the two countries.

The latest cargo of 59,100 metric tons was denied entry on Dec. 10 after quarantine officials in the eastern province of Zhejiang detected MIR 162, a GMO strain not yet approved for import by the agriculture ministry, a quarantine official says.

Since the middle of November, quarantine authorities in China, the world’s second-largest corn consumer, have already turned away about 180,000 metric tons of corn.

“It is really causing big trouble and it seems to be related to bilateral trade conflicts,” says a corn trader with a domestic trading house.

U.S. government data shows that China’s appetite for corn remains strong. It was the top destination for U.S. supplies two weeks ago, which analysts say outweighs any concerns about the rejections of a few cargoes.

The U.S. Department of Agriculture says it inspected 17.6 million bushels of corn earmarked for China recently, which made up 44 percent of the total amount of corn the government inspected.

“If they are still importing it, it makes us wonder if this is more of a political game that China is playing,” says Terry Reilly, senior commodity analyst at Futures International. “As long as China is taking U.S. corn on a weekly basis ... we are not going to get bearish on this topic.”

About 2 million metric tons, or 78.736 million bushels, of U.S. corn is headed for China in ships and China has already committed to buying another 3 million metric tons of the U.S. grain.

WTO deal

China last month fought back against accusations by the U.S. that it was blocking a World Trade Organization technology deal, with Commerce Minister Gao Hucheng calling the U.S. “irresponsible.”

This month, China also launched a trade dispute against the U.S. to challenge Washington’s accusations of having dumped cheap exports on the U.S. market.

Traders say another three cargoes had already tested positive for MIR 162, a GMO strain developed for insect resistance, and were expected to be turned away from ports in Guangdong and Fujian. Some are not even being unloaded, making it easier to ship them to other markets, including Japan.

“Rejections will be frequent, following large arrivals in coming weeks,” says one industry source who asked not to be identified because of the sensitivity of the issue.

“Some cargoes simply berth offshore and buyers are not unloading the cargoes before testing results are complete.”

The U.S. corn market appeared unaffected by China’s rejection. Chicago Board of Trade March corn futures were up 2 cents at $4.29½ a bushel Dec. 11. Prices have increased 4.2 percent since China’s first rejection in November.

Large volumes of the rejected corn have been snapped up by importers in other Asian countries, sometimes with price cuts, European traders say.

China expects a record corn harvest this year and faces a massive glut because of weak consumption by the animal feed industry.

Its corn output in 2013 to ’14 is likely to rise 5.9 percent on the year to a record 217.7 million metric tons, surpassing consumption, seen at 197 million.

The country’s corn consumption fell 1.1 percent from the previous year, partly linked to outbreaks of bird flu early in 2013, the China National Grain and Oils Information Center says.

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