December 18, 2013 / 10:27 AM / 6 years ago

UPDATE 1-China rejects 30 pct of corn shipped in from U.S. this year

* China rejects 600,000 T of U.S. GMO corn since mid-Nov

* Move may hurt global corn prices

* State quarantine officials say testing underway, situation in flux (Recasts with details, quotes)

By Dominique Patton and Niu Shuping

BEIJING, Dec 18 (Reuters) - China has rejected more than 600,000 tonnes of U.S. corn since mid-November, after tests showed an unapproved gene-altered strain, an influential consultancy said, taking the volume of such shipments to about 30 percent of imports this year.

The rejection of more corn by China, the world’s second-largest consumer of the grain, could further squeeze global prices that are hovering around a three-year low hit this month.

Ten cargoes, equivalent to about 600,000 tonnes, is six cargoes more than the number confirmed by China’s quarantine authorities by last week, private firm JC Intelligence (JCI) said in a report seen on Wednesday.

The United States has urged China to act promptly to approve the genetically modified strain MIR 162, developed by Syngenta AG, with high-level talks between the two sides scheduled in Beijing this week.

“The rejections hurt (imports) a lot. Whether there are more rejections depend on this week’s talks,” said Li Qiang, chief analyst with JCI.

In a facsimile message to news agency reporters, the state quarantine agency declined to confirm the number of additional cargoes rejected, saying the situation regarding the testing and rejection of cargoes was changing.

China, which has emerged as a leading importer of corn in recent years, is forecast to buy a record 7 million tonnes in the marketing year to Aug 2014, up from 2.7 million the previous year, the U.S. Department of Agriculture says.

About 2 million tonnes, or 78.736 million bushels, of U.S. corn is headed for China in ships and China has already committed to buying another 3 million tonnes of the U.S. grain.

Li said nearly 40 cargoes had already arrived in China since the middle of November, more than half of which had passed the tests.

China is the world’s No. 3 corn importer after shifting from exports to net imports in 2010, sourcing nearly all its shipments from the United States.

Besides a bearish influence on U.S. corn futures, China’s rejection is likely to hit cash prices in Asia.

“It is definitely a bearish influence as rejected cargoes will boost supplies in other markets,” said one Singapore-based trader with an international trading company. “These cargoes will most likely go to South Korea, Japan or Taiwan, but they have booked what they need well in advance.”

The rejections followed a glut in the wake of a record domestic corn harvest. Beijing is trying to shore up corn prices to help farmers.

China faces a massive glut due to weak consumption by the animal feed industry. Its corn output in 2013/14 is likely to rise 5.9 percent on the year to a record 217.7 million tonnes, surpassing consumption, seen at 197 million.

Some believe the rejection may have been prompted by other trade disputes between the two countries.

China last month fought back against U.S. accusations that it was blocking a World Trade Organisation technology deal, with Commerce Minister Gao Hucheng calling the United States “irresponsible”.

This month, China also launched a trade dispute against the United States to fight Washington’s accusations of having dumped cheap exports on the U.S. market.

China’s quarantine authorities added that the U.S. and corn exporters must increase inspections prior to export, and guarantee that corn going to China met Chinese legal requirements and quality and safety standards. (Additional reporting and writing by Naveen Thukral; Editing by Clarence Fernandez)

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