China has approved its first major shipment of genetically modified Argentine corn, Buenos Aires officials said on Tuesday, signaling an increase in competition for a market long dominated by U.S. exporters.
Argentine Agriculture Minister Norberto Yauhar said Chinese health authorities cleared 60,000-tonnes of genetically modified (GMO) Argentine corn. The cargo was already headed inland to be used as hog and chicken feed.
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Benchmark Chicago corn futures fell briefly after Reuters reported on the shipment. Argentina competes for market share with the United States, the No. 1 world corn exporter. But CBOT corn futures, which were already depressed due to good U.S. crop weather, ended the session mixed.
"For many years we have worked to gain access to the Chinese market. Today we did it with a cargo of very high quality corn," Yauhar said in a statement that named trading company Bunge as the exporter of the cargo.
"The authorities in China have finally let us in, opening a potentially enormous market for our corn," the minister added.
Argentina is the world's No. 3 corn and soybean exporter, as well as its top supplier of byproducts such as soyoil and soymeal. China is already a major buyer of Argentine soy.
A grains industry source in Buenos Aires said China has also approved the import of Ukrainian corn. "The story is China needs food, food, food," the source said.
ANIMAL FEED WANTED
Demand for corn-fed pork and poultry has boomed in China as a growing middle class can afford a higher-protein diet.
The Argentine corn was imported by China's state-owned trading house COFCO and left Argentina about a month ago, said three Buenos Aires-based grains trading sources, hours before Yauhar's statement came out.
The market knew since May that Argentine corn was headed to China. But questions lingered as to whether it would be approved for entry by the AQSIQ, China's General Administration of Quality Supervision, Inspection and Quarantine.
"The cargo has now been approved by the AQSIQ and the vessel has been discharged in China. The corn is officially imported and on its way to end customers," said a source at a major trading company in Buenos Aires, asking not to be named.
Chicago corn prices have fallen sharply from record highs last summer, and many analysts and traders expected prices to fall further on prospects for a U.S. bumper crop this season.
In contrast to last year, the world is expected to be awash with corn for the foreseeable future, keeping prices in check. Argentina's 2012/13 crop is nearly all harvested.
China is seen by corn futures traders as a wild card in their attempt to pencil in specific price projections.
Most Argentine corn is genetically modified. A small amount was allowed into China late last year as a test case under a China-Argentina GMO deal signed in February 2012.
There is broad scientific consensus that food on the market derived from genetically modified crops pose no greater risk than conventional food. However, advocacy groups argue the risks of GMO food have not been adequately identified.
(Additional reporting by Sam Nelson in Chicago; Editing by David Gregorio and Clive McKeef)