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Storm over China's corn, DDG imports 'temporary' - USDA boss

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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 grains.

'Temporary setback'

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 feed grain".

"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."

'Buyers afraid'

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 corn.

"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".

Ethanol caution

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 mandate.

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.


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