China finds unapproved GMO corn in more US cargoes, rejection likely -traders

Reuters

* Possible rejection sparks worry among China buyers

* New China orders for U.S. corn could decline sharply-traders

* Follows shipment that was turned away in mid-Nov

* MIR 162 corn expected to get China approval soon

* Variety is already shipped to top corn importer Japan, EU

By Niu Shuping and David Stanway

BEIJING, Dec 3 (Reuters) - China, one of the world's largestcorn importers, is likely to reject more U.S. shipments of thegrain after they were found to contain a genetically modifiedvariety not approved by Beijing, traders said.

That has sparked fears that other cargoes could be turnedaway, with some traders and buyers warning that uncertainty overthe discovery could prompt a sharp decline in new Chinese ordersfor U.S corn.

"We are completely lost and have no idea how to deal withthe situation," said one executive with a major animal feedmill.

"Not all corn cargoes were blocked for entry, but it is amessy situation."

An initial U.S. corn cargo was rejected in mid-November dueto the discovery of the same variety, Syngenta AG's Agrisure Viptera, at a time when U.S. corn exports to China havebeen soaring as Beijing grapples with record-high domestic cornprices and rising demand for food.

Traders have said that the variety, also known as MIR 162,is set to be approved by China soon. It is already shipped todestinations such as top corn importer Japan, South Korea andthe European Union.

Slowing Chinese demand would drag further on global pricesthat have dropped around 40 percent so far this year onexpectations of a bumper U.S. harvest. Chicago Board of TradeDecember futures eased on Tuesday in Asia.

One cargo of about 60,000 tonnes in the southern province ofFujian was found to be tainted with MIR 162, traders said onTuesday.

The same GMO strain was found in another 49 containers,equivalent to 1,225 tonnes, at the port of Shenzhen, they said.It was Shenzhen's quarantine authority that last month rejectedone cargo of the grain from the United States containing MIR162.

"Since this is the same GMO in the latest discovery, theshipments may have to be blocked for entry," said one trader.

Quarantine officials at Fujian, Shenzhen and Beijingdeclined to make immediate comment.

POSSIBLE DELAYS

Buyers said that they were unlikely to place new orderswhile shipments were in danger of being rejected.

"The latest discovery is bad news for some buyers ... andwill slow imports," said Li Qiang, chief analyst with ShanghaiJC Intelligence Co. Ltd. (JCI).

Some U.S. exporters have already been in talks with Chinesebuyers over possible delays in existing orders in the wake ofthe first GMO discovery, the China National Grain and OilsInformation Center (CNGOIC) said in a report.

The official think-tank earlier estimated China's cornimports in December would be about 1.75 million tonnes.

China is expected to import a record 7 million tonnes ofcorn in the 2013/14 (Sept/Aug) marketing year, up from 5.23million tonnes the previous year, according to the U.S.Department of Agriculture (USDA).

The U.S. supplied nearly 94 percent of China's corn importsin the first 10 months of 2013.

China already allows imports of 25 different GMO cornvarieties and is considering adding other commonly cultivatedkinds to the list, including Agrisure Viptera, which has beenpending approval for about 18 months.

Designed to offer enhanced protection against crop-damaginginsects and widely grown in the U.S., it was expected to get thegreen light later this year or in 2014, according to traders.

A bulk corn shipment from Argentina was cleared for importearlier this year despite it containing traces of MIR 162.

The latest possible rejection comes as Beijing gets intofull swing stockpiling its domestic corn harvest in the majorgrowing provinces in the northeast, aiming to shore up domesticprices and help farmers.

Beijing is offering subsidies to feed mills in buyingdomestic corn due to tight storage capacity. Domestic demand hasbeen weakening, while the country, the world's second largestcorn consumer, is expected to harvest a record crop this year.

Government stockpiles are expected to double to around 60million tonnes in 2013/14 - nearly 30 percent of the country'sannual consumption.

China turned into a net corn importer in 2011 as domesticproduction failed to meet rising demand driven by more meatconsumption as the country urbanises.

The U.S. historically is the world's top supplier of corn,exporting between 10 and 20 percent of its harvest each year.

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