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January 9, 2014

 

China eases inspection on US DDGs imports

 

 

China's quarantine authorities have accelerated testing on imports of distiller's dried grains (DDGs), relaxing checks on the corn by-product since cargoes from US were rejected for contamination of unapproved GMO strain, Reuters reported.

 

By late December, China had turned away about 2,000 tonnes of US DDGs and about 600,000 tonnes of US corn after shipments were found to contain traces of Syngenta AG's MIR 162 genetically-modified variety of corn, which has been awaiting Beijing's approval for more than two years.

 

One trader said that quarantine authorities have relaxed inspections on DDG shipments. The DDG rejections had pressured Chicago Board of Trade corn prices, with traders fretting that cargoes would be difficult to switch to other destinations as the substitute for corn meal in animal feed is not widely used in the rest of Asia. Chinese buyers have to bear all losses from any rejections, the traders said.

 

The traders added that some DDG buyers have resumed shipments from the US, the largest exporter.

 

After the stricter testing caused a backlog, quarantine authorities in the province of Guangdong and city of Shanghai met with industry participants this week and agreed to speed up inspections, said one industry source.

 

Chinese market analyst JCI said in a letter that the situation seems to have improved these days and inspection turns regular. "Last week, there were 20-25% of imported DDGs passing the customs inspection and the passing rate has increased to 40-50% this week, as market insiders expect the customs clearance rate will further rise to 60-70% next week," said the Shanghai-based analyst firm, widely followed by the US grain trade for China market trends.

 

China, the world's top buyer of US DDGs, accounted for about 40% of US exports of the high-protein feed in the 2012-13 marketing season.

 

A signal that China's grain inspections approvals were improving came on Monday (Jan 6) when the price of US DDGs jumped US$10 per tonne, or 5% or more, at export markets, rebounding from steep declines that occurred during December in nervous reaction to China's stance.

 

US traders said the December price drops of up to 20% in DDGs had spurred fresh domestic and export interest - including from China. Barges of DDG shipped in the first three months of the year on the Mississippi River continued to rise, bid at US$205 per tonne, up from US$180 last week but down from US$275 in early December, they said. But Chinese inspections of corn cargoes look likely to remain strict.

 

Industry sources said Beijing's GMO corn scrutiny is due to domestic supply glut as it seeks to curb cheap imports and support domestic corn prices.

 

A US Grains Council delegation travelled to China this week to try to resolve the issue.

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