China traders cancel U.S. corn cargoes on tighter GMO controls, buy from Ukraine: sources

BEIJING (Reuters) – Some Chinese buyers have
cancelled corn purchases from the United States and switched to
rival supplier Ukraine, as Beijing tightens controls on
processing genetically modified strains of the crop, three trade
sources and an analyst told Reuters.

Any prolonged shift by one of the world’s top corn importers
would unnerve U.S. farmers as they prepare to harvest a bumper
crop this year and could potentially mark a new front in trade
tensions festering between China and the United


Chinese buyers late last year stepped up purchases of U.S.
corn, which is mostly genetically modified, following a rally in
domestic prices.

But the sources said it had become tougher for Chinese grain
mills to get permits to process genetically modified corn this
year, forcing some traders that supply them to instead turn to
non-GMO shipments from Ukraine.

China’s agricultural ministry did not respond to a request
for comment, while the trade sources declined to be identified
as they were not authorised to speak with media.

“Traders this year have been more inclined to buy corn from
Ukraine as it is non-GMO and doesn’t require the (processing)
permit,” said Cherry Zhang, analyst with Shanghai JC

“Even some who had ordered U.S. corn cancelled the orders
and switched to Ukraine.”

It was unclear how many shipments had been affected, but one
of the sources, a senior trader in Beijing, said up to four
cargoes totalling about 210,000 tonnes and worth about $40

million based on current prices had been cancelled last month as
end-users had not received permits to process GMO crops.

“For March (delivery), some people had no choice, they had
to wash out, but for April and May, they are still waiting (to
see if their buyers get processing permits),” he said, using an
industry term for cancelling an order.

The development comes as Beijing broadly increases scrutiny
of genetically modified imports. Last year, it toughened the
application process for getting safety certificates for imports
of GMO soybeans, delaying cargoes and curbing purchases.

Ukraine accounted for about two-thirds of China’s 2.83
million tonnes of corn imports last year, with the United States
making up a quarter.

Export prices from Ukraine have jumped on the higher demand,
the senior trader said, rising by $20 since the start of the
year to this week hit their highest since July 2016 at $180 per
tonne <MAZ-FOBUA-P1>.

“It is hard for U.S. corn to come in now due to the GMO

issue. Getting the GMO processing permit is very difficult,”
said a corn trader in eastern China who cancelled a U.S. cargo.

“I had only ordered 7,000 tonnes of U.S. corn, but had to
cancel the order and turned to Ukraine,” he said.

On Sunday, Beijing launched an anti-dumping and anti-subsidy
investigation into imports of sorghum from the United States,
fuelling concerns in the industry that soybeans might be caught
up in trade action.

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