April 9, 2014

 

 

Following the discovery of an unapproved genetically modified strain in US corn shipments, China has allowed Brazilian corn imports starting this month, a further blow to US exports to the world's no. two consumer of the grain.

 

From March 31, corn from Brazil had been approved for import, Chinese quarantine authorities said. The government of Brazil, the world's second-largest corn exporter after the US, flagged the move late last year, but the start date was not revealed at that time.

 

China mainly imports corn from US, but shipments from the country have been curbed after officials turned away about one million tonnes due to the presence of a genetically-altered strain that has not been approved by Beijing.

 

Brazilian corn exports to China could weigh on US futures which have come under pressure since China started rejecting US cargoes late last year. On Tuesday (Apr 7), benchmark May corn was little changed after closing 0.5% lower in the last session.

 

"It means US corn prices have to be competitive with the rest of the world," said Paul Deane, agricultural commodity strategist at ANZ in Melbourne. "All (origins) trade at some degree of relativity, but US corn does trade at a premium."

 

The news comes a week after China's biggest grain trader COFCO Corp. agreed to acquire a majority stake in Noble Group Ltd's agribusiness.

 

Noble owns a number of agricultural assets in South America, including grain storage facilities, soy processing plants and shipping terminals. In addition to storage for grains and soy in Brazil, Noble has a 75% share in a dry bulk export terminal at Santos port. COFCO also announced in February plans to buy a 51% stake in Dutch trader Nidera.

 

China is boosting sources of animal feed grain supplies as the nation's domestic production is failing to move in step with rapidly growing demand for protein-rich food.

 

The country, which already imports 60% of the world's traded soy, is expected to emerge as a top corn buyer.

 

In the wake of the rejections of US cargoes, China has stepped up imports from Ukraine. Argentina, Peru, Thailand and Laos are the other nations approved to ship corn to China.

 

Brazil is expected to export 20 million tonnes of corn in the 2013-14 marketing year, according to an estimate by the USDA.