New variety won’t flood market

China approves new Syngenta GM corn variety that previously hindered U.S. exports

China’s approval of Syngenta’s Agrisure Viptera corn gave the crop a little boost, but it is no panacea for ailing grain prices, says an analyst.

Chinese vice-premier Wang Yang announced Dec. 17 that regulators had finally approved Viptera, a genetically modified corn variety that Syngenta submitted for approval in 2010.

Syngenta commercialized the product in the United States in 2011, well ahead of Chinese approval.

China began rejecting U.S. corn shipments in November 2013 after they tested positive for Viptera.

The U.S. National Grain and Feed Association estimated in an analysis published April 16 that China had rejected 1.45 million tonnes of U.S. corn because of Syngenta’s unapproved trait.

It pegged losses for U.S. sellers for the 2013-14 marketing year at $1.95 billion. Syngenta is facing a number of lawsuits by grain companies and farmers.

The news of China’s approval of Viptera contributed to a 14 cents per bushel increase in nearby Chicago corn futures, or 3.5 percent.

But there could be more stormy seas ahead for exporters shipping corn to China, said Dan Basse, president of AgResource Company.

“We think there will be other phytosanitary issues raised, so we don’t think this is the end of the GMO trail,” he said.

“By early next year, there will be other U.S. corn that could come under fire because of China’s overwhelmingly large corn stockpile, which some people think is 123 million metric tonnes.”

That means more than half of the 216 million tonnes that the country is expected to consume in 2014-15 is sitting in government reserves. The grain was acquired at heavily subsidized prices.

Basse said China will use any non-tariff trade barrier in its power to reduce cheap corn imports until it can get rid of its rotting and expensive stockpiles.

That’s why he thinks China will continue to refuse shipments from the U.S. for containing other unapproved traits, such as Syngenta’s Duracade 5307, which was commercialized in 2014.

The National Grain and Feed Association estimates Duracade will cost U.S. farmers and exporters a further $2.3 billion in 2014-15.

Basse believes Chinese corn imports will continue to be constrained for another three to five years unless China experiences a major drought.

China would prefer to rid itself of its surplus by becoming an exporter of the crop, but World Trade Organization rules prevent the country from flooding grain markets with subsidized product.

Basse said the movement of U.S. distillers grain to China has im-proved. The country is now taking 300,000 tonnes of the product per month.

That offsets the loss of the Turkish market because of the discovery of GM corn in distillers grain shipments. Turkey has a zero tolerance policy for GM crops.

“The Chinese are stepping in now to replace some of that,” he said.

Basse said a weather disaster in a major importing or exporting region of the world is the only thing that will pull grain markets out of their doldrums.

“With China having so much grain, it’s hard to find a demand driver unless you have a weather problem,” he said.

“So we’re probably looking toward the Northern Hemisphere next May, June and July for the next time that grain prices can maybe be more bullish.”

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