U.S. farmers have been up in arms over China’s decision to launch anti-dumping and anti-subsidy investigations over imports of sorghum. Now, they’re canceling corn cargoes.
As I noted last week, China canceled four cargoes of U.S. corn in January. In turn, they purchased corn from Ukraine, a country that has seen tough weather conditions along the Black Sea. At a time that U.S. farmers prepare for another bumper crop, is it fair to say that this is part of a growing trend from the Chinese? Those 210,000 MT were quite a blow to morale.
While there have been concerns about trade policy between China and the United States, we have to unpack what happened with those four corn cargoes. Millers in China require specific permits to handle GMO corn. When the millers buying those cargoes didn’t have the right paperwork, they were forced to turn to Ukraine to source non-GMO grain.
China isn’t the export market that it used to be. Back in 2011/12 U.S. corn exports totaled 5.147 million MT. Back in 2012, almost every ear of corn came from the U.S. corn belt. But China began buying from rival Ukraine and looked into nearby markets like Laos.
By 2014/15, that figure had fallen to 474,000 MT, and 85% decline. China’s massive corn reserves and the uptick in production reduced the need for a steady stream of U.S. corn. The nation also has been pushing back on all things GMO.
The numbers this year aren’t terribly hot either. From September 1, 2017, to February 1, 2018, total commitments for Chinese corn purchases sit at just 200,508 MT. The hope moving forward is that China’s massive feed and ethanol markets will renew interest in U.S. corn.
Right now, however, there isn’t much reason to expect a sudden shift in China’s corn policy.
China traders cancel U.S. corn cargoes on tighter GMO controls, buy from Ukraine: sources
BEIJING (Reuters) – Some Chinese buyers have cancelled corn purchases from the United States and switched to
rival supplier Ukraine, as Beijing tightens controls on processing genetically modified strains of the crop, three trade
sources and an analyst told Reuters.
Any prolonged shift by one of the world’s top corn importers would unnerve U.S. farmers as they prepare to harvest a bumper
crop this year and could potentially mark a new front in trade tensions festering between China and the United States.
Chinese buyers late last year stepped up purchases of U.S. corn, which is mostly genetically modified, following a rally in
But the sources said it had become tougher for Chinese grain mills to get permits to process genetically modified corn this
year, forcing some traders that supply them to instead turn to non-GMO shipments from Ukraine.
China’s agricultural ministry did not respond to a request for comment, while the trade sources declined to be identified
as they were not authorised to speak with media.
“Traders this year have been more inclined to buy corn from Ukraine as it is non-GMO and doesn’t require the (processing)
permit,” said Cherry Zhang, analyst with Shanghai JC Intelligence.
“Even some who had ordered U.S. corn cancelled the orders and switched to Ukraine.”
It was unclear how many shipments had been affected, but one of the sources, a senior trader in Beijing, said up to four
cargoes totalling about 210,000 tonnes and worth about $40 million based on current prices had been cancelled last month as
end-users had not received permits to process GMO crops.
“For March (delivery), some people had no choice, they had to wash out, but for April and May, they are still waiting (to
see if their buyers get processing permits),” he said, using an industry term for cancelling an order.
The development comes as Beijing broadly increases scrutiny of genetically modified imports. Last year, it toughened the
application process for getting safety certificates for imports of GMO soybeans, delaying cargoes and curbing purchases.
Ukraine accounted for about two-thirds of China’s 2.83 million tonnes of corn imports last year, with the United States
making up a quarter.
Export prices from Ukraine have jumped on the higher demand, the senior trader said, rising by $20 since the start of the
year to this week hit their highest since July 2016 at $180 per tonne <MAZ-FOBUA-P1>.
“It is hard for U.S. corn to come in now due to the GMO issue. Getting the GMO processing permit is very difficult,”
said a corn trader in eastern China who cancelled a U.S. cargo.
“I had only ordered 7,000 tonnes of U.S. corn, but had to cancel the order and turned to Ukraine,” he said.
On Sunday, Beijing launched an anti-dumping and anti-subsidy investigation into imports of sorghum from the United States,
fuelling concerns in the industry that soybeans might be caught up in trade action.