November 30, 2010

China to ship out rejected US corn soon

A US corn cargo held in a Chinese warehouse since September for failing to meet local regulations on gene-altered grain will be shipped out by the year-end, according to sources.

The corn was offloaded into a warehouse at Chiwan Port in the south of the country in September, and later rejected by quarantine officials. The destination has not been decided, sources said.

Cofco Ltd bought the 54,000 tonnes of cargo from a Japanese trading company. This was the first time China rejected a US corn shipment.

"China's rejection has had a negative impact on importers of US corn, because the message is that no matter how short China's grain supply is, the government's tough controls on imports won't change," an analyst said. Such uncertainties will increase risks and costs of future imports, he added.

China, the world's second-biggest corn consumer, may import more than 1.6 million tonnes of the grain this year, almost all from the US, according to the China National Grain & Oils Information Centre. That would be the most since about 1994-1995, when the country bought 4.3 million tonnes, according to the USDA data.

Still, China's imports will rise in the long run, and the government has said it can only maintain a tight balance, the analyst continued. "From our sources, we learned within three to six months, this particular strain of rejected seeds may be approved."

China has bought foreign corn and sold from state stockpiles to cool domestic prices that climbed 27% in the past 12 months, helping push inflation to the fastest pace in two years.