New China feed grain rule unworkable: U.S. export group

CHICAGO Thu Jul 24, 2014 9:22pm EDT

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CHICAGO (Reuters) - The biggest U.S. grain export association called on China on Thursday to rescind its latest restriction of a GMO corn strain, saying the new demand was unworkable.

Trade sources said China issued the new requirement affecting distiller's dried grains (DDG), a popular livestock feed that is a by-product of corn ethanol manufacturing.

Traders say China is demanding certification that DDG imports do not contain the MIR 162 GMO strain. Grain traders say the U.S. government does not issue zero tolerance certification.

"China is asking for something that cannot be done. This certificate that they're asking for does not exist," said Tom Sleight, president and chief executive officer of the U.S. Grains Council.

Sleight said China had also made the new requirements effective immediately, causing serious disruptions.

All DDG shipments departing from July 24 that do not meet the certification requirement will be rejected, the North American Export Grain Association told members in a note on Thursday, traders said.

"It's time for China to look at and approve this trait," Sleight said."Lack of approval of MIR 162 is becoming an undue impediment on trade."

Sleight said the strain has been approved in the United States since 2010 and is approved in all other importing countries but China, including the European Union, which has strict GMO rules.

China stopped issuing import permits for U.S. DDG shipments in June over concerns about the MIR 162 GMO strain, which is not approved by the agriculture ministry.

The United States exported 2.31 million tonnes of DDGs to China from January to May with total U.S. exports in the period at a record 4.996 million tonnes, according to U.S. Department of Agriculture data.

Chicago Board of Trade corn futures fell to new contract lows early on talk that China, the biggest buyer of U.S. DDGs, was seeking the certification, but later trimmed losses to end just slightly down from Wednesday's close.

DDG cash prices fell $5 to $15 a ton, or as much as 8 percent, on prospects for weak export demand going forward, traders said.

The U.S. Grains Council also would have to "discontinue its role as the agent for U.S. ethanol companies in submitting registration dossiers" to China's Ministry of Agriculture because of the new requirement and China's new regulations on registering U.S. ethanol plants that intend to export DDGs, the council said in a letter to members seen by Reuters.

The MIR 162 GMO strain in corn was developed by Syngenta AG.

"It's a de facto embargo in terms of U.S. DDG trade into China," said Dan Basse, president of consultancy AgResource Co. "USDA is not in a position to be issuing GMO certificates in general. So it's not going to happen."

(Reporting by Christine Stebbins; Additional reporting by Julie Ingwersen and Michael Hirtzer; Editing by Matthew Lewis and Lisa Shumaker)

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