China remains "awash in local supplies" of corn
A Chinese government official has confirmed that the country has approved imports of GM Agrisure Viptera corn (MIR 162) and two varieties of GM soybeans (item 2).
However, an article for Reuters (item 1 below) comments that US corn exporters will likely see little impact if US corn gets put on the approved list for China’s crop importers again, as "China’s main buyers remain awash in local supplies and so will have little or no need for overseas supplies for the foreseeable future".
It's also worth noting that MIR 162 is a GMO corn that Syngenta is phasing out and replacing with Agrisure Duracade. The Chinese are not even close to approving that.
1. Corn bulls shouldn’t get too excited about China’s GMO corn nod: Maguire
By Gavin Maguire
Reuters, Dec 18, 2014
China’s alleged tune-change on accepting genetically modified U.S. corn shipments is unlikely to open the floodgates for U.S. exports to China anytime soon. China’s own flabby cash corn markets suggest the country already has plenty of inventories on hand.
Cash corn prices in Shandong Province – China’s top demand center – recently declined for the seventh consecutive week and are now some $72 per tonne (16.6 percent) off their 2014 highs and at their lowest levels since last spring.
Admittedly, those cash prices are still around $170 a tonne above the export price of corn at the U.S. Gulf, but nonetheless show little sign of urgency or supply tightness that would suggest an imminent surge in import demand.
Indeed, the subdued tone of domestic markets coupled with projections for China’s corn stocks to swell to 13-year highs open the door to a potential pick-up in corn exports from China. China corn exports are already projected to increase by over 350 percent from last year to four-year highs, but could climb further in 2015 if local traders determine that overseas buyers offer a better market for their supplies than domestic consumers.
And any such climb in outbound shipments of corn from China could eat into U.S. export market share elsewhere in Asia in major markets like Taiwan, South Korea, and Japan.
So while U.S. exporters may at first look favorably on China’s softened stance towards U.S. corn imports, it is clear China has no obvious need for excess supplies over the near term, and may well be in a position to compete with the U.S. as an exporter next year should domestic prices remain soft and supplies remain abundant.
For most of the past 20 years, China was a net exporter of corn due to strong government-level commitment to self-sufficiency in grain production and relatively robust annual production growth rates than generally exceeded the growth rates in domestic demand.
However, between 2008 and 2011 China’s corn demand pace accelerated at a faster pace than domestic production, leading to a draw on domestic inventories and increased tension among the grain origination and distribution community which was charged with ensuring an adequate and reliable flow of food and feed supplies to end users.
It was during this period when China initiated its most high-profile forays into the corn import arena, scooping up more than 5 million tonnes in 2011/12 and a further 2.7 million the following year.
On their own, those import tonnages were very modest, considering that total World corn imports for those years were 116 million and 95 million tonnes respectively.
But because of China’s status as a major producer and consumer of corn, the mere fact that the country felt it necessary to also import large tonnages of the grain were interpreted by market players as extremely bullish. The worst drought in decades during the U.S. corn growing season also exacerbated China’s import impact around that time.
Yet following a strong rebound in domestic production last year – along with a steep climb in domestic stocks – China backed away from the import market with great fanfare in 2013. A dispute over unapproved GMO-strains found in corn shipments from the U.S. was the official reason for the import back-pedal, although some market observers have suggested that China’s official aversion to genetically modified crops was merely a smokescreen to allow the country’s buyers to back out of U.S. import deals and repurchase supplies at lower prices.
Regardless of the real motivation behind the shut-off of U.S. purchases over the past year or so, the recent change in tone in corn import communiqués by China will be welcome news for U.S. exporters, and will give them hope for an uptick in demand from the country going forward.
Recent reports of mould found in corn stockpiles in top growing areas will also boost sentiment among corn sellers.
But for the most part, U.S. corn exporters will likely see little impact if U.S. corn gets put on the approved list for China’s crop importers again, as China’s main buyers remain awash in local supplies and so will have little or no need for overseas supplies for the foreseeable future.
(Reporting By Gavin Maguire)
2. UPDATE 2 - China approves imports of Viptera corn, two types of soybeans - Vilsack
By Tom Polansek
Reuters, 17 Dec 2014
A top Chinese government official said the country has approved imports of genetically modified Agrisure Viptera corn and two varieties of biotech soybeans after years of review, U.S. Agriculture Secretary Tom Vilsack said on Wednesday.
Chinese Vice Premier Wang Yang said imports of Viptera corn, known as MIR 162, had been approved by China's Ministry of Agriculture, Vilsack told reporters at a U.S.-China trade forum in Chicago. The ministry also approved imports of biotech soybeans developed by DuPont Pioneer and Bayer CropScience, he added. Vilsack said he did not know the names of the soybean varieties.
"He just simply said the ministry of agriculture has approved these events," Vilsack said of China's vice premier.
Vilsack spoke with Wang Yang at the U.S.-China Joint Commission on Commerce and Trade, and said it was not unusual for Beijing to take action ahead of the forum.
However, the import approvals do not represent a loosening of China's sluggish regulatory review process for GMO crops, Vilsack said.
"Their system is what it is," he said of China's review process. "You get approvals sometimes, and sometimes you don't."
Approval of MIR 162 corn is significant because U.S. corn trading with China has essentially shut down since Beijing began turning away cargoes containing the Syngenta AG strain in November 2013. It was approved for planting in the United States but not for import by China.
Commodities traders Cargill Inc and Archer Daniels Midland Co, along with dozens of farmers, have sued Syngenta over MIR 162, claiming hundreds of millions of dollars in damages from the trade disruptions in China, a major importer.
Seed makers like Syngenta and Dow AgroSciences complain that China's review process hurts their ability to launch new products because it is not predictable and does not always rely on science.
Syngenta, DuPont, and Bayer are waiting for official notice of the new import approvals from China, said Darci Vetter, chief agricultural negotiator in the office of the United States Trade Representative.
"We think this is very welcome news," she said in an interview.
Representatives of Syngenta, DuPont, and Bayer did not immediately respond to e-mails seeking comment.
China's Agriculture Ministry has declined to comment on approval for MIR 162.
Bayer has been waiting seven years for China to approve a new soybean seed called LL55 and has delayed starting sales in the United States while waiting for China's clearance.
(Reporting by Tom Polansek; Editing by Chris Reese, Chizu Nomiyama, and Diane Craft)