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China’s Soybean Demand May Rise Amid Scrutiny of DDGS Imports

Dec. 26 (Bloomberg) -- Demand for soybeans in China, the biggest buyer, may jump after quarantine officials increased screening of corn-derived animal feed, Shanghai JC Intelligence Co. said.

Inspectors now check every batch of the dried distillers’ grains for MIR 162 corn, a genetically modified variety the government doesn’t approve, two people with knowledge of the matter said. Quarantine officials in Shanghai rejected a recent shipment of U.S.-produced DDGS because of the unapproved corn gene, they said.

“This will boost demand for meal made from soybeans because DDGS is an alternative protein source in animal feed,” said Sylvia Shi, an analyst at the Shanghai-based agriculture researcher. DDGS, a by-product of making ethanol from corn, is used to feed hogs, cattle, poultry and fish, she said.

About 450,000 metric tons of DDGS a month were expected to arrive from the U.S. in January and February, Shi said. These cargoes will probably be delayed until at least April as traders wait to see if the government approves the MIR 162 variety, she said.

Soybeans for March delivery on the Chicago Board of Trade rose 0.2 percent to $13.2275 a bushel at the close of trading on Dec. 24. Soybean meal on the Dalian Commodity Exchange closed little changed today at 3,369 yuan a ton after advancing 1.2 percent yesterday.

The General Administration of Quality Supervision, Inspection and Quarantine in Beijing said in a statement last week that as of Dec. 19 it had rejected 12 regular corn shipments from the U.S. totaling 545,000 tons because they contained MIR 162.

China’s imports of DDGS in the first 11 months of 2013 rose 69 percent from a year ago to 3.5 million tons, according to data from state-owned researcher Grain.gov.cn. For the marketing year that began on Oct. 1, inbound shipments of soybeans are projected to climb 15 percent to a record 69 million tons, according to the U.S. Department of Agriculture.

To contact the reporter on this story: William Bi in Beijing at wbi@bloomberg.net

To contact the editor responsible for this story: Brett Miller at bmiller30@bloomberg.net

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