June 4 (Bloomberg) -- Prices of U.S. wheat may decline should more countries delay or cancel purchases from the largest supplier after an unauthorized, genetically modified strain was found in Oregon, according to the United Nations. Futures fell.
“In Asia, and for good reasons, countries are concerned,” Abdolreza Abbassian, senior economist at the Food & Agriculture Organization, said in an interview. “If more countries start having second thoughts or cancel their purchases, it could have downward pressure on prices of U.S. wheat, to be compensated by perhaps somewhat higher prices of other origins.”
The discovery risks hurting demand for U.S. supplies at a time when the FAO is predicting a record global grains harvest that will increase competition among shippers, including Russia and the rest of the Black Sea region. Five of the 10 biggest U.S. wheat buyers are in Asia, and Japan, the largest, halted some U.S. imports after the Oregon find was announced. The Consumers Union of Japan said it wants all U.S. shipments to be halted.
“We are asking the government to impose a ban on wheat imports from the U.S. completely,” Michiyo Koketsu, an officer in charge of GM issues at the group in Tokyo, said by phone today. “We are concerned about the safety of the genetically modified wheat as nobody has checked whether it is suitable for human consumption. We are worried that the modified wheat had already been sold and consumed in Japan.”
The U.S. Food and Drug Administration determined in a 2004 consultation that the crop is as safe for people and animals as conventional wheat, the Department of Agriculture said in a statement last week.
Wheat futures for July delivery fell 0.8 percent to $7.0325 a bushel at 9:21 a.m. on the Chicago Board of Trade. The price through yesterday declined 8.9 percent this year, partly on speculation that global production will increasee.
“Regardless of this problem, I think the Black Sea suppliers would be providing more grain to the world market this year,” said Abbassian, who’s been at the Rome-based UN agency since 1990. “Even in importing countries, production is pretty good this year. It’s likely you’ll have a contraction in world trade, while you have bigger supplies in 2013-2014,” he said.
The genetically modified wheat, developed by Monsanto Co., turned up on an 80-acre farm. The St. Louis-based company had withdrawn an application for approval of the strain nine years ago amid concern that buyers would avoid crops from the U.S. Monsanto said there’s reason to believe the current incident is isolated and should not concern consumers or trading partners.
Japan suspended imports of U.S. western-white wheat and feed wheat and canceled an order, the Ministry of Agriculture, Forestry and Fisheries said on May 30. South Korean millers suspended purchases of U.S. white wheat, a trade association said a day later and the Taiwan Flour Mills Association said it wants the U.S. to label cargoes by state of origin.
South Korea’s Ministry of Food and Drug Safety is examining wheat and flour from Oregon to check for unapproved, gene-altered materials and will announce the test results tomorrow, the ministry said in a statement yesterday. So far, no unapproved materials have been found, it said.
The global wheat crop will climb 5.4 percent to 695 million metric tons this year as the acreage expands and yields improve, the FAO forecast last month. Russian supply may jump 46 percent to 55 million tons as Australian output expands 8.6 percent to 24 million tons, it said. World output of so-called coarse grains will gain 9.3 percent to an all-time high, it said.
The five biggest U.S. buyers in Asia are Japan, the Philippines, South Korea, Taiwan and Indonesia, according to Michael Spier, a vice president of U.S. Wheat Associates.
North, South and Southeast Asia accounted for 38 percent of the 27.13 million tons of U.S. wheat sold as of May 23 for delivery in the year ended May 31, the USDA said on May 31.