CHICAGO (Reuters) — The biggest U.S. grain export association called on China on Thursday to rescind its latest restriction of a GMO corn strain, saying the new demand was unworkable.
Trade sources said China issued the new requirement affecting distiller’s dried grains, a popular livestock feed that is a by-product of corn ethanol manufacturing.
Traders say China is demanding certification that DDG imports do not contain the MIR 162 GMO strain. Grain traders say the U.S. government does not issue zero tolerance certification.
“China is asking for something that cannot be done. This certificate that they’re asking for does not exist,” said Tom Sleight, president and chief executive officer of the U.S. Grains Council.
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Sleight said China had also made the new requirements effective immediately, causing serious disruptions.
All DDG shipments departing from July 24 that do not meet the certification requirement will be rejected, the North American Export Grain Association told members in a note on Thursday, traders said.
China is the world’s top buyer of DDGs and sources most of its supplies from the United States. Chinese firms have been scrambling to import the corn by-product as a way to skirt restrictions on overseas purchases of corn.
“It’s time for China to look at and approve this trait,” Sleight said. “Lack of approval of MIR 162 is becoming an undue impediment on trade.”
Sleight said the strain has been approved in the United States since 2010 and is approved in all other importing countries but China, including the European Union, which has strict GMO rules.
Quarantine and port authorities in China did not respond to faxes and phone calls seeking comment. Chinese traders said the new requirements were issued on Monday and were effective immediately.
“This will effectively stop all DDG imports from getting in from the United States. Many companies basically stopped placing orders since last month after port authorities stopped issuing import permits,” said an executive at a Chinese trading firm.
China stopped issuing import permits for U.S. DDG shipments in June over concerns about the MIR 162 GMO strain, which is not approved by the agriculture ministry.
China’s imports of DDGs in May hit a record high of 645,648 tonnes, a rise of 182 percent from a year ago, according to customs data. But arrivals in June dropped about seven percent on month after authorities tightened requirements.
“The government has been cracking down on the DDG market and corn imports since the start of the year and I think the main reason behind all these measures is to protect the local industry,” said Li Xiaoli, an analyst at Chengdu Beite Futures.
“The corn industry is already oversupplied and the government has been actively stockpiling to support farmers. Beijing really doesn’t need any other distraction, like imports, to add pressure to local market.”
Chicago Board of Trade corn futures fell to new contract lows early on Thursday amid talk that China, the top buyer of U.S. DDGs, was seeking the certification, but later trimmed losses to end just slightly down from Wednesday’s close.
The U.S. Grains Council also would have to “discontinue its role as the agent for U.S. ethanol companies in submitting registration dossiers” to China’s Ministry of Agriculture because of the new requirement and China’s new regulations on registering U.S. ethanol plants that intend to export DDGs, the council said in a letter to members seen by Reuters.
The MIR 162 GMO strain in corn was developed by Syngenta AG .
“It’s a de facto embargo in terms of U.S. DDG trade into China,” said Dan Basse, president of consultancy AgResource Co. “USDA is not in a position to be issuing GMO certificates in general. So it’s not going to happen.”
