Corn Rejections Prompt New Business

By Katie Micik
DTN Markets Editor

SEATTLE (DTN) — Something was noticeably absent from Howard Minigh’s speech on the need to harmonize global biotech trait approvals: any mention of MIR 162.

While the CropLife International CEO discussed the issues the grain industry faces with traits being approved in some countries that are importers of U.S. grains but not others, he skirted the one issue that hung in the minds of most of the audience. The MIR 162 corn insecticide trait, otherwise known as Viptera, is at the heart of one of the highest profile market access issues in agriculture.

China’s refusal to approve the trait has helped push down corn and distillers grains prices and led to a flurry of lawsuits in the grain industry.

That Minigh was speaking at Export Exchange, a biennial meeting of international grain industry buyers and sellers from 30 different countries, and even dodged questions about the controversial corn from the audience, is telling about how touchy the subject of MIR 162 has become.

That uneasiness is at least partially due to the lawsuits looming between the corn’s creator Syngenta, and farmers and grain companies that grew and handled the grain. Other speakers, including one of Bunge’s top economists and a U.S. Grains Council staff member, likewise sidestepped questions from the audience about China’s refusal to approve MIR 162. Bunge has refused to accept corn with the trait, and is being sued by Syngenta. The grains council in general has been critical of companies marketing biotech traits that lack global approval.

Perhaps another reason the corn was not officially addressed from the podium was that most of the importers in the audience were ready buyers, anxious to fill their country’s needs with plentiful, lower-cost U.S. corn.

"There’s this kind of angst right now about what we are going to do with this huge crop," U.S. Grains Council president Tom Sleight told DTN on the sidelines of the conference, which USGC co-hosted with the Renewable Fuels Association. "I match that against the excitement I see in this room here. Everyone seems to be very upbeat about doing business."

U.S. grain products are making a big comeback, Sleight said.

"Our loyal markets — Japan, Korea, Taiwan — they’ve come back very strongly, and we’ve had 90% market share since April," he said.

Add to it rebounding growth in Latin America, particularly Mexico and Colombia. Then there’s Egypt, which went from importing zero U.S. grains to 2.7 million metric tons in one year’s time. These countries may not buy huge amounts in single purchases, like China occasionally does, but it adds up, Sleight said.

Last year, the U.S. exported 1.97 billion bushels of corn, according to USDA. Exports are forecast to decline 9% in the 2014-15 marketing year now that countries have refilled their pipelines. Sustaining 2013-14′s growth will be the key to the next year, Sleight said.

"As we all know, there’s lots of competition out there. We’ve got problems with China, and they’re not going to be as big of a player, probably. So we’re just digging around every corner of the world, trying to dig out demand we can satisfy."

Southeast Asia could be a dark horse of corn demand. It’s the world’s fastest growing feed market, and "it’s slowly getting to the critical mass where they need to turn to somewhere like the United States to reliably supply their needs," he said.

Traditionally the U.S. is less competitive in that market because the transportation costs from South America are much lower. But Sleight and USGC’s southeast region director, Kevin Roepke, think current prices will help the U.S. gain market share.

"Sometimes, when one door closes, another one opens," Roepke said. "When China rejected some of those shipments, it introduced some southeast Asian buyers to U.S. product. Once they get more comfortable processing U.S. corn and more comfortable with our infrastructure, I think they’ll buy more. In the long run, the rejections really added to our trade connections."

In the meantime, Sleight and the staff are working with U.S. negotiators and their counterparts in Beijing to resolve the issue. They’re part of a group trying to get the president to engage on these trade issues when he visits China next month.

Sleight said the MIR 162 trade dispute could be resolved quickly, it could take a long time, or it could even be both, Sleight said.

"It’s a really tough issue. Farmers, they want to have access to technology. China wants to have their questions about biotech answered."

Overall, he thinks the U.S. is making progress. A few recent comments seem to indicate China’s stance may be softening, but it’s clear there’s still a lot of work to be done.

"We’re attacking it at every level from high to low," Sleight said. "There’s no silver bullet; a silver buckshot is what we need."

Katie Micik can be reached at katie.micik@dtn.com

Follow Katie Micik on Twitter @KatieMDTN

(GH\SK)