July 9, 2005

Japanese corn importers likely to shift away from US corn to avoid Bt-10

A Japanese company has bought about 100,000 tonnes of South African corn as an alternative to US supply to avoid the risk of receiving cargoes tainted with Bt-10 corn. This marks the first import deal for South African corn since February 2004, when Japan imported 5,743 tonnes.

Japanese corn importers are growing increasingly concerned about sustaining huge losses from buying US corn cargoes containing Bt-10, an unapproved strain of genetically modified (GMO) corn.

In recent weeks, four Japanese corn importers have already been ordered by the government to destroy or ship back corn cargoes from the United States after the shipments tested positive for traces of the illegal strain.

Japan has a zero-tolerance policy on imports of unapproved GMOs but the Agriculture Ministry has proposed accepting feed grain cargoes with up to 1 percent of Bt-10, to decrease disrupted US corn supplies to Japan.

Currently, South African corn is more expensive than US corn, which is offered to Japanese buyers at a premium of less than $1.80 a bushel, cost and freight, over Chicago Board of Trade corn futures. But when considering costs for shipping back tainted US cargoes, some importers may see South African corn as affordable.

Traders said South Africa is best positioned to meet demands from Japanese buyers who seek alternative supply sources, as it expects its largest corn harvest in more than a decade and could export several million tonnes.

Japanese interest in corn from China, a major corn supplier in the Asian market, remains low due to quality and delivery problems, while high shipping rates have discouraged Japanese firms from buying corn from areas such as South America.