Rejections of U.S. distillers' dried grain (DDGs) shipments, first by China and then by Turkey, are isolated events and not a sign of broader trade disruptions to come, U.S. traders and industry sources said on Friday.
The U.S. Grains Council on Thursday confirmed that Turkey has rejected three shipments of the feed ingredient and ethanol byproduct as it steps up enforcement of rules on imports of genetically modified corn. A fourth cargo was diverted from the No. 6 buyer of U.S. DDGs.
"The Turkish market, historically, has always been a little touchy. We had this kind of non-tariff trade barrier situation with Turkey back in 2010 and that market really collapsed in 2011," said Geoff Cooper, senior vice president at the Renewable Fuels Association, an ethanol industry group.
China, the world's top importer, rejected dozens of U.S. DDGs cargoes earlier this year because they contained traces of MIR 162, a GMO variety unapproved for import.
One U.S. trader said the Turkey rejections may total as many as five, and another said that Israel and Morocco may be the new destinations for the cargoes.
They added that Archer Daniels Midland Co was believed to be the seller of the rejected cargoes. An ADM spokeswoman said the Chicago-based grain trader was not involved.
Turkey has imported 385,421 tonnes this year through October, up 53 percent from the same period a year earlier, according to industry data. (link.reuters.com/qup63w)
The rejections came as no surprise to many traders after a near halt to DDGs imports in 2011 when Turkey tightened quality standards and imposed labeling and packaging requirements.
The U.S. Grains Council cited "internal issues" as the cause of Turkey's tighter enforcement measures on imports this time.
"There was always that (rejection) potential. You always knew it was out there. China is a bigger deal than the Turkey thing but Turkey is not insignificant," a U.S. trader said.
Export prices at the Gulf Coast have rebounded from lows two months ago following a collapse in shipments to top buyer China in July and were higher on Friday, as other buyers such as No. 2 importer Mexico stepped in to absorb any excess supply.