China, the biggest buyer of U.S. agricultural products, rejected more shipments of corn as Vice President Joseph Biden landed in Beijing to convey displeasure over a new air defense zone.
Five more batches of the U.S. grain containing the unauthorized gene-modified variety MIR 162 have been blocked at Chinese ports, the General Administration of Quality Supervision, Inspection and Quarantine said in a statement posted on its website today.
“We can’t ignore that there may be a political message given the timing,” said Gao Yanbin, the director of research at Jinshi Futures Co. in Shanghai. “This is going to be quite a blow to the U.S. corn market.”
China has been a net importer since 2010 and purchased a record 5 million metric tons on global markets in the year through September 2012. The U.S. Department of Agriculture forecast last month that China may buy 7 million tons in the year through September 2014, making it the fourth-biggest buyer.
Corn for March delivery fell 0.6 percent to $4.285 a bushel on the Chicago Board of Trade at 5:32 p.m. Beijing time. Futures in the U.S. have slumped 39 percent this year amid record supplies. On China’s Dalian Commodity Exchange, the contract for May was little changed at 2,366 yuan a ton, or $9.86 per bushel.
Biden was set to meet President Xi Jinping today and has said he would seek clarity about Communist Party leaders’ intentions when they set up the zone Nov. 23. It overlaps with one administered by Japan and covers islands both sides claim.
Inspectors in southeastern Fujian province, northern Shandong and the southern city of Shenzhen ordered 120,643 tons to be returned after one disallowed batch of 60,000 tons last month, the quarantine service said in the statement.
Chinese companies, including state-owned COFCO Corp., China Grain Reserves Corp. and private feed mills had contracted more than 2 million tons of corn to be shipped from the U.S. in the next few months, Gao said. It would be difficult to separate the MIR 162 corn that may be mixed among other grain, he said.
The variety, developed by Syngenta (SYNN) AG, is attractive to growers because it is resistant to insects including corn earworm and fall armyworm.
While China’s agriculture ministry withheld approval of seed over the last two years, some traders had bet authorization would soon be granted, said Gao.
In August 2011, Bunge Ltd. said it was refusing delivery of corn cultivated from MIR 162 seeds given China hadn’t approved the variety.
Domestic buyers and global suppliers may refrain from signing agreements because they don’t know whether the government will stop more cargoes, Li Qiang, chairman of Shanghai JC Intelligence Co., said on Nov. 27
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