December 16, 2013
US corn exports to China continue despite rejection due to GM corn
Exporters shipped 370,700 tonnes of corn to China in the week ending December 5, about 38% of all US corn shipped last week, according to the USDA. The figure followed shipments of 587,900 tonnes the previous week, 56% of that week's total shipments.
A cargo of 59,100 tonnes was turned away on December 10 in the eastern Chinese province of Zhejiang after quarantine officials found Agrisure Viptera corn also known as MIR 162 -- an insect-resistant GMO strain which the country's agriculture ministry has yet to warrant. The variety, developed by Syngenta AG, is approved for import by all other top global corn buyers but is not allowed by Beijing.
China, the world's second largest corn consumer, has refused 180,000 tonnes of grain since mid-November. Observers believe it has less to do with the corn and more to do with other trade disputes between the two countries.
In November, China fought US accusations that it was blocking a World Trade Organisation technology deal which would cut tariffs on products. US Trade Representative Michael Froman said later that month that China's demand to exempt over 100 products from the deal risked breaking negotiations.
In response, China's commerce minister, Gao Hucheng, said it was "irresponsible for the US to discard the consensus that has been agreed by most of the countries only because the deal cannot meet its own requirement for several products."
This month, China challenged further accusations from Washington that it dumped cheap exports on the US market.
Growing domestic corn surpluses may also explain some reticence to accept further US imports. Weak consumption from the animal feed industry looms large in China, as this year will likely yield a record corn harvest. Its corn output for 2013-14 is expected to rise 5.9% to reach a new record for consumption.
China's corn imports are expected to rise in the long-term, as the country urbanises and the demand for meat and dairy rises.
US government data still shows that China has a strong demand for corn, as it was the top destination for US supplies last week. For analysts, the demand overshadows the recent handful of corn rejections.
The USDA said that it inspected 447,000 tonnes of corn headed to China last week, representing 44% of the total amount of corn inspected by the USDA.
Around two million tonnes of US corn is on its way to China, which has already committed to another three million tonnes of US grain. However, traders said that another three cargoes have already been shown to contain MIR 162, and are expected to be refused from ports in Guangdong and Fujian.
The US corn market has not been impacted by the Chinese rejections. Prices have increased 4.2% since the first refusal in November. Much of the rejected corn has been acquired by importers in other Asian markets, at times with price cuts, according to European traders.
