China rejects U.S. corn cargoes for GMO amid domestic glut
But China is expecting a record corn harvest this year, and demand has also been hit by a series of food safety scares early in the year, which reduced meat and poultry consumption and slashed the use of corn feed.
"Domestic firms may be scared away from the (import) market due to the (GMO) issue, which will support domestic corn prices in the south," said Feng Lichen, senior analyst with an industry portal (www.yumi.com).
Beijing has promised to stockpile the domestic harvest in the growing area of the northeast as it seeks to shore up domestic prices and boost farmer incomes.
Domestic buyers are unlikely to be especially inconvenienced by any delays brought about by the decision to reject the U.S. cargoes.
Following adjustments made to import agreements between the U.S. and China last year, U.S. exporters are now deemed liable for any losses caused by problematic or unapproved cargoes, analysts said. Previously, the buyer was held completely responsible.
As well as the 2 million tonnes of U.S. corn currently on its way, there are still another 3 million tonnes bought by China that have not yet been dispatched. Buyers might also welcome the opportunity to slow deliveries in hope that domestic prices might recover, boosting their margins if they re-sell locally.
"We saw it in cotton a few years ago - you get a sharp drop in prices and it is not beyond the realms of possibility that buyers will want to be a little more picky on specifications and use any excuse to knock back or renegotiate a cargo," said ANZ's senior agriculture analyst, Paul Deane.
"There's probably not a lot of urgency to be importing a lot of corn at the moment," he added.
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