April 15, 2014

China is looking for new partners to expand its growing corn trade, partly driven by its continued rejections of US corn and the inability for the two countries to gain traction in trade hiccups, according to a grain analyst.

Shawn McCambridge, a senior grain analyst at Jefferies Bache Commodities LLC in Chicago, said China's effort to diversify its origination base amid continued biotechnology hang-ups with American producers helps reduce the country's risk of overreliance on a single corn supplier.

McCambridge said that one of the shifts that's taking place in the world markets is the emergence of China as an importer. "From China's perspective the best thing you can do as a buyer is have as many origins as possible, and I think they're being proactive."

But the impetus to drive the dialogue over genetically modified (GM) corn is lacking because China does not really need the imports right now, McCambridge added.

He said China is stockpiling huge reserves right now, and some of the rejection is due to the abundance of corn that China has domestically. Domestic prices are higher than import prices and bringing in a lot of imports puts a real burden on domestic producers.

Chinese imports of corn and corn by-products from the US last year totalled 2.5 million tonnes, according to the World Trade Atlas.

Since mid-November, China's General Administration of Quality Supervision, Inspection and Quarantine has turned away nearly one million tonnes of US corn and corn products.

Peng Yufa, chief scientist at China's Beijing-based committee on the safety of biotechnology, was quoted as saying that China has dietary habits and ecosystems different from the West, so "we don't deem something safe just because foreign countries say it is". Peng said further understanding was needed on trans-genetic technology because it's still a new thing.

Kent Beadle, a manager with the Russell Consulting Group, an Iowa-based agricultural consultancy firm, said China has accepted genetically modified corn in the past and "Chinese officials will do what they believe is best to manage supply and demand".