CHICAGO (Reuters) - Despite molding corn stocks and unreliable alternate suppliers, China is not expected to immediately revive U.S. corn imports following Beijing's expected approval of a biotech variety responsible for a year-long halt to shipments.
U.S. corn prices hit five-month peaks this week, partly on reports that Chinese approval of Syngenta AG's Agricure Viptera corn could come in the near future and that this could also help sales of dried distiller's grains (DDGs), a corn-based animal feed, into their biggest market.
But prices fell on Tuesday after investors focused instead on burdensome global corn stocks and the risk that trade could again be disrupted if other unapproved GMO corn varieties grown in the United States are found in Chinese shipments.
"Whether the Chinese take some corn or not does not really affect the world corn supplies all that much. Ukraine is still offering corn at prices cheaper than the U.S. and Argentina is expected to be back in the export market starting in March," Summit Commodity Brokerage said in a note to clients.
Viptera, also known as MIR 162, was blamed for Chinese cancellations of more than 1 million tonnes of corn and corn product shipments over the past year.
Still unapproved for import in China is another Syngenta variety known as Agrisure Duracade that U.S. farmers harvested for the first time this autumn.
"These companies that sold corn (to China) last year lost millions of dollars. Internally, some of these multinationals would refuse to sell to China," a cash-connected U.S. trader said. "Unfortunately, (MIR 162 approval) probably means nothing because we have a big question mark on Duracade."
Archer Daniels Midland Co, Cargill Inc [CARG.UL], Trans Coastal Supply Co and farmers from the biggest U.S. corn-growing states all have sued Syngenta over the rejections.
Still, the lucrative Chinese market may be hard for U.S. exporters to resist if China looks for extra supplies to cope with moldy stocks and disruptions to shipments from Ukraine.
Historically a net corn exporter, China turned net importer in 2009. At the peak in 2012, China imported more than 5.3 million tonnes of U.S. corn, making it the third-largest market.
"China basically in some respects is an exporter's bread and butter," said Terry Reilly, an analyst with Futures International.
Additional reporting by Thomas Polansek; Editing by Ken Wills