BEIJING, China (Reuters) — China’s quality watchdog has turned away more corn cargoes from the United States because of the discovery of a genetically modified strain not approved by Beijing.
Further rejections are likely, traders said.
They said a Jan. 6 report by the official Xinhua news agency said China had rejected 601,000 tonnes of corn and corn byproducts from the U.S. by the end of last year, indicating more corn cargoes had been turned away since Dec. 20.
That was when 545,000 tonnes of grain had been refused by the General Administration of Quality Supervision, Inspection and Quarantine (AQSIQ).
“China’s feed demand is pretty weak and we understand there are more cargoes of this unapproved variety on the way,” said one Singapore-based grains and oilseeds trader, referring to the MIR 162 variety developed by Syngenta AG.
“There could be more rejections and it is very bad for trade as losses are mounting.”
Xinhua, citing AQSIQ, did not give further details on the rejections. China has also been turning away U.S. dried distillers grain and has imposed strict checks on the corn byproduct.
“We expect more cancellations as both buyers and suppliers are increasingly uncertain on the situation,” said one industry source. “Suppliers are not delivering any cargoes, which bear the risk of rejection.”
The strict inspections triggered Chinese buyers to cancel their largest U.S. corn purchases in 14 months, while several more cargoes of the grain initially bound for China were diverted to other Asian nations.
Chicago corn futures have been under pressure from rising global supplies and China’s cancellation of U.S. cargoes.
Ample supplies amid weak domestic demand have pressured Dalian corn prices on China’s Dalian futures exchange, with the most-active contract down by more than one percent since the first cargo was rejected in mid-November.
China’s corn harvest was up 5.9 percent on the year at a record high 217.7 million tonnes, surpassing consumption seen at 197 million tonnes for the year.
The U.S. price of DDGs has slid 20 percent in a week as exporters shy away from selling the corn-based feed grain to its top customers China after Beijing rejected shipments containing the strain.
China’s quality watchdog issued a notice to local authorities and asked them to increase testing of U.S. DDG shipments after the GM strain was detected in two batches of shipments totalling 758 tonnes Dec. 23, the administration said.
Buyers are trying to delay customs clearance, while some are trying to postpone and cancel future shipments, traders said.