Hey China, what would you do if…?

Hey China, what would you do if…? All we’ve been hearing over the past few weeks is “China rejects corn shipment!” China rejected 601,000 metric tons of corn in 2013. They are claiming that the corn contained the unapproved insect resistant MIR 162 gene which is found often in GMO corn varieties. They are also rejecting DDGs from US shipments for the same reason. And more than likely they are correct when they claim the shipments contained GMO corn. In 2012, 88% of all corn grown in the US was GMO corn. In fact, I would be surprised if I could find any of our members that don’t grow any GMO corn. It’s simply the way of the world these days. I did get a chance to talk to a young man the other day who is pushing conventional crops with some success. But still most of the corn in the US that will be grown in the foreseeable future will be from GMO varieties. So what is China to do when they need the corn but can’t seem to get the quality they want from the US? The Ukraine has shipped their first corn vessel to China recently. However the Ukraine cannot supply China with all their needs. To answer this question I think it’s best to look at China’s past behavior. During the 2012/2013 marketing year China imported approximately 7.4 million metric tons of US corn. They rejected very few metric tons (the amount went unreported). In doing this do you think they found any GMO corn in the shipments they did not reject? Did they even test them? It makes me wonder if maybe China needed corn bad enough that year that they were willing to overlook certain quality specifications. Could it be that the Peoples Republic of China would accept product from the US even if it was not in spec? We all know that China has been a big buyer of US corn for the past several years. In fact, in 2013, 40% of US corn exports went to China. Their economy is growing exponentially and will do so into the foreseeable future. So why suddenly, if their need for corn is growing, would they reject corn from the US? What happened to corn price between January and December of 2013? The price went down $2.69. More than likely China bought US corn for delivery in November and December back in the early summer or even late spring months at very high prices. When that very expensive corn showed up at the end of 2013 when corn was around 4.25 you have to think that someone was getting reprimanded in a major way. So what if the cost of rejecting the corn because it contained GMO varieties and then going out and buying corn cheaper is less than simply accepting the corn they contracted? Simply put… what would you do? I might be completely off on my theory but for now I’m sticking to it.

Jan. 8, 2014

Tom Miller