China's apparent curbs on imports of US distillers' grains
and corn represent only a "temporary" hiccup, Joseph Glauber, one of the most
important people in agriculture, although the head of a major Chinese grains group took a more cautious view.
Mr Glauber, chief economist at the US Department of Agriculture,
said that while China had for years defied expectations of emerging as a major grains
importer, it appears to have "finally arrived" as a buyer, if with demand this
season focusing on the likes of sorghum, rather than corn.
Large amounts of grain were needed to meet the country's
growing demand for meat, in particular pork.
"China will have to produce a lot more animal protein," Mr
Glauber said, with increased meat output implying growing demand for foreign feed
The comments follow reports on Monday that China had
suspended imports of distillers' grains (DDGs), a byproduct of corn ethanol
manufacture, in the latest furore over Syngenta's MIR 162 genetically modified
corn type. The reports fuelled a sharp drop in corn futures.
While the variety is approved in Washington, it has yet to
be cleared by Chinese authorities, which have seen November rejected a series
of cargoes of US corn over claims of tainting with MIR 162.
"Despite the issues for corn and now the recent issue in DDGs,
the fact is that China needs pork, it needs protein," implying a need "to secure
"The discussion we have seen in the trade [over the corn and DDG import restrictions] will be temporary,"
he told a conference in London.
"The US will continue to be a major exporter in the world
for coarse grains and oilseeds."
However, the comments contrasted with those from Jilong
Feng, general manager at China's Dalian Northern International Grain Logistics Company,
who cautioned that buyers in China were "afraid" over the prospect of seeing
their purchases of US corn rejected.
"Even if the price [of imports] is low, even if there are allotted
[import] quota," Chinese feed mills were reluctant to purchase from the US for
fear of falling foul of Beijing's "zero tolerance" of genetically modified
"I think this situation will maintain at the same level for
some time to come," Mr Feng said, although he acknowledged that a rise in Chinese
grain imports long term was "unavoidable".
Mr Glauber also struck a more bearish note in a caution that
any decision by Washington to backtrack on plans for a steep cut in the ethanol
mandate may not prove a big boost to US ethanol producers.
The so-called "blend wall", equivalent to about 13.5m
gallons of ethanol a year – the level of ethanol that the US market can absorb
without a push to levels above a proportion of 10% mixed into gasoline - will limit any benefit from a more generous
Although investors, to judge by the RINs market, appeared to
be factoring in a boost to ethanol markets from Washington's biofuels rethink, "the
biggest beneficiary will be biodiesel", made from vegetable oils such as soyoil.
However, he acknowledged the growing success by US ethanol
in export markets, largely to Canada, but the likes of Brazil, the United Arab
Emirates and the Philippines too.