China is reportedly allowing more U.S. distillers dried grains into the country after rejecting some 660 tons of corn-based DDGs and 2,205 tons of regular corn, both containing an unapproved genetically modified strain.
But expectations that China will approve grain imports with the strain of MIR 162 in late spring are “pure speculation,” as the reasoning behind China's regulatory stance can be hard to discern and the block could be part of a larger trade issue, an executive at a major U.S. grain shipper told the JOC.
China market analyst JC Intelligence told clients on Tuesday that the amount of imported DDGs receiving approval from Chinese authorities has increased from 20 to 25 percent to 40 to 50 percent in the last week, according to a letter seen by Reuters. The Shanghai-based firm told clients that “market insiders expect the customs clearance rates will further rise to 60 to 70 percent next week.”
US. exports of corn to China, which include corn-based DDGs, fell by about 128,000 short tons in the week ending Dec. 26, according to a U.S. Department of Agriculture report. It’s not clear how much of the decline was due China’s blocking of GMO crops, as total exports in the same week were down 90 percent from the prior week and down 80 percent from the prior four-week average.
The rejection of shipments adds to the “unknown liability” of doing business with China, the grain executive said. U.S. shippers are encouraged to do business with other countries where there is more certainty and then look to China for remaining business. But with more of their stock accounted for by other foreign buyers, U.S. shippers can push higher prices to Chinese buyers. If they do, the blocking of GMOs — seen by some in the trading industry as a Chinese attempt to force down prices — actually could backfire in the long term for the top importer of U.S. agricultural products.
The implications of the blocking of such genetically modified food products for containerized shipments of corn and corn-based DDGs, a feed ingredient, are unclear. Containerization allows shippers to control whether the loads contain genetically modified crops better than bulk shipping.
“It’s too soon to tell whether there will be gain or increase” in export container shipments, according to Bo DeLong, vice president of grain operations at The DeLong Co., a transloading exporter. “We don’t know whether GMO incidents are isolated or not.”
U.S. containerized exports of distillers dried grains to mainland China nearly doubled in the first 11 months of 2013, rising 93.8 percent compared to the same period in 2012. Export volume spiked 118.4 percent year-over-year in November but plummeted 64.1 percent below the level in October.
The motive of Chinese authorities in blocking the GMO crop imports could truly reflect concerns about such products, but the action could be an attempt to lower import prices, said Drew Wilkins, contributing editor to Grain Analyst. China’s Ministry of Agriculture is supportive of GMO crops overall, but accusations that such U.S. crops are being used to harm the country’s populace have fueled a backlash, according to Adam Minter, a Wall Street Journal correspondent in Shanghai. He noted in a column that “the real cause of the anti-GMO zeal expressed by China’s quarantine officials” might be an attempt by Beijing to appease the populace’s growing food safety concerns “without actually doing much about it.”