Ethanol Blog

China has now officially accepted the Syngenta MIR 162 (Agrisure Viptera) biotech trait and is reportedly seeking U.S. corn and dried distillers grains with solubles, but U.S. sellers will justifiably be cautious, according to an article by Ethanol Producers (http://bit.ly/…).

Randy Ives, director of ethanol services for Gavilon, stressed that U.S. DDG marketers will likely be careful to manage risk regarding trade with China, largely due to issues with trade from the past year.

In Dec. 2013, China began to reject shipments of U.S. corn with the trait, and rejection of DDG soon followed, causing prices to plummet. In Aug. 2014, a new demand required all shipments of DDG to be accompanied by official certification it was MIR 162-free; however, the U.S. refused the requirement, since no certification existed. After that, DDG trade with China came to a standstill and DDG prices dipped to their lowest point in more than five years.

Although Syngenta received official documents of MIR 162 approval from China Dec. 22, trust was broken and U.S. companies lost millions of dollars. A class action lawsuit against Syngenta claims, based on estimates from the National Grain and Feed Association, the U.S. corn market has lost between $1 billion and $2.9 billion because of issues relating to China.

In any case, U.S. companies are likely to be very cautious about resuming trade with China, and accepted the December announcement with the intentions of not taking additional risks. Some are possibly requiring large down payments on shipments to China, in order to protect themselves.

Ives pointed out that when China stopped buying U.S. DDGS, buyers in other countries came to the table, began purchasing and have continued since.

Some traders are also wary that because of past history, the acceptance of MIR 162 will not be a solution for all trade issues with China.

"There are other problems, other barriers, in play yet," Ives said in the Ethanol Producer article. "We're still trying to figure out what the running rules are and what other technicalities we will have to abide by."

Cheryl Anderson can be reached at Cheryl.anderson@dtn.com

(ES)

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