China bought its first U.S. corn in more than two months last week, the U.S. Agriculture Department said Thursday, despite an unresolved dispute over a biotech variety that has not been approved for import by the country.
The purchase, which followed seven consecutive weeks of cancellations by the world’s third-largest corn importer, puzzled traders as the risk for rejection was high and China’s corn stocks were ample.
China has officially rejected 887,000 tonnes of U.S. corn since November because shipments contained Syngenta AG’s MIR 162 variety. The strain is designed to offer enhanced protection against crop-damaging insects and is approved by all other major importers.
“It’s a gutsy move if there’s no agreement concerning the GMO issue. I certainly haven’t seen any movement on either side,” said Shawn McCambridge, analyst with Jefferies Bache.
“China’s reserves are said to be somewhere around 60 million tonnes and demand for feed has tapered off with the bird flu issue and the economic slowdown so there’s not really a need to bring the corn in,” he said.
USDA reported net sales of 69,476 tonnes of corn to China in the week ended March 13, taking the country’s total purchases for the 2013/14 marketing year (Sept/Aug) to just over four million tonnes. Of that total, all but 1.392 million tonnes has been shipped.
The USDA’s latest forecast for Chinese corn imports this season is five million tonnes.
U.S. corn exporters may begin to add risk premiums to future purchases by China following the recent rejections, a USDA official warned on Thursday.
China’s biosafety committee is scheduled to meet at the end of March and if no decision is taken on the pending Syngenta application at that time the next opportunity for a review will be in June. (Reporting by Karl Plume in Chicago; Editing by James Dalgleish)
By Karl Plume