Corn re­jec­tions ‘ lit­tle cause for con­cern’: an­a­lyst

China Daily (Canada) - - CHINA - By JACK FREIFELDER in New York jack­freifelder@chi­nadai­lyusa. com

China’s re­jec­tion since mid-Novem­ber of hun­dreds of thou­sands of tons of US corn and corn byprod­uct is lit­tle cause for con­cern, ac­cord­ing to a grains an­a­lyst.

Chi­nese and US of­fi­cials will meet to tackle the prob­lem be­fore any marked ef­fect on trade is noted, said Shawn McCam­bridge, a se­nior grains an­a­lyst at Jef­feries Bache Com­modi­ties LLC in Chicago.

“This is­sue will be ad­dressed at high lev­els in each gov­ern­ment,” McCam­bridge said Thurs­day in an in­ter­view with China Daily. “Th­ese is­sues come up ev­ery once in a while. While it is un­usual, I don’t re­ally think it will have a great deal of long-term ef­fect on trade be­tween China and the US in terms of corn.”

Reuters re­ported Dec 18 that China had re­jected 600,000 tons of corn from the US since mid-Novem­ber be­cause the ship­ments are the hy­brid MIR162, a mod­i­fied va­ri­ety of in­sect-re­sis­tant corn de­vel­oped by Syn­genta AG, a Swiss com­pany spe­cial­iz­ing in the mar­ket­ing of seeds and pes­ti­cides. China has not ap­proved the im­port of that hy­brid.

“We’re talk­ing about a hy­brid that’s been ap­proved by nearly ev­ery na­tion in the world, in­clud­ing the EU,” McCam­bridge said. “It’s not a case where China is re­ject­ing some­thing that some­one else won’t take. We’ve ac­tu­ally seen the op­po­site, where a lot of th­ese re­jected car­goes have been di­verted to other mar­kets — al­beit at a dis­count.”

“It may take some time, but ten­sions will start to rise if things don’t get re­solved,” McCam­bridge said. “If the mar­ket was overly con­cerned that this was go­ing to dev­as­tate the busi­ness re­la­tion­ship, we would most likely have seen corn go down. China is look­ing to di­ver­sify and the world mar­ket has seen that.”

John Payne, a se­nior mar­ket an­a­lyst with Daniels AG Ser­vices in Chicago, sees the corn re­jec­tions as a mi­nor is­sue for US corn grow­ers.

“This is the first time they’ve ever re­ally done any­thing like this, and we just hap­pen to have a lot of prod­uct,” said Payne. “It’s more of a psy­cho­log­i­cal dart at the corn mar­ket. In re­al­ity we’re the only shop on the block. When it comes to corn, beans and wheat, if you need prod­uct tomorrow you’re com­ing here.”

The corn-ship­ment re­jec­tions come when it ap­pears China may end its two-year ban of ap­ples from Wash­ing­ton State. A spokesman for the USDA said ear­lier this month that Chi­nese agri­cul­tural of­fi­cials are close to al­low­ing Wash­ing­ton’s Red and Golden De­li­cious ap­ples back into China next month.

China banned ap­ples from Wash­ing­ton — the only US ap­ples al­lowed in China — af­ter a ship­ment to China in early 2012 was de­clared to be car­ry­ing “posthar­vest dis­eases.” It is un­clear if that will also open up the US im­port of ap­ples from China, which pro­duces half the world’s ap­ples.

Ac­cord­ing to a June 2013 re­port by the US Depart­ment of Agri­cul­ture, North Asia — a re­gion com­prised of Ja­pan, the Chi­nese main­land, South Korea, North Korea, Hong Kong, Tai­wan, Mon­go­lia and Ma­cao — ac­counts for more than onethird of all US agri­cul­tural ex­ports.

Bulk com­modi­ties — in­clud­ing soy­beans, corn and cot­ton — ac­count for an over­whelm­ing 56 per­cent of US agri­cul­tural ex­ports to the North Asian re­gion. China has seen its bulk com­mod­ity im­ports from the US in­crease to $20 bil­lion in 2012 from $1 bil­lion in 2002.

How­ever, Payne said that there is some po­ten­tial for China’s de­mand for corn to de­crease.

“It’s very dif­fi­cult for us to try to fun­da­men­tally as­sess the bal­ance sheet of the world’s corn sup­plies,” Payne told China Daily.

DANIEL ACKER / BLOOMBERG

Corn is trans­ferred from one grain cart to another dur­ing har­vest out­side Malden, Illi­nois. China’s re­jec­tions of 600,000 tons of corns on the rea­son of be­ing ge­net­i­cally mod­i­fied won’t hurt US agri­cul­tural ex­ports to China sig­nif­i­cantly, an­a­lysts said.

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