Argentina and China are in talks to resolve differences over Argentine corn exports said to contain genetically modified strains of the grain.

Chinese officials said the GM strains weren’t approved beforehand by Beijing but didn’t explain details of the objectionable grain. Argentina is keen to defuse tension over the dispute, which threatens to undermine the Latin American country’s growing corn trade.

Negative publicity about Argentine corn is also a source of worry for Argentine exporters who hope to profit from low corn yields in the United States. Global corn prices have been inching upward, mostly in response to lower than expected U.S. production.

At least two contains of Argentine corn are reported to be under a “quarantine,” China imported 4.56 million tons of corn in the first 10 months of 2012 but about 99% of the grain originated in the United States, the largest corn exporter in the world. But escalating prices of U.S. corn have been a disincentive for some Chinese importers.

Chinese data on imports and domestic demand remain conflicting, however. The data indicated China could cut back U.S. corn imports more than 50% while considering other sources to meet rising demand from the farms. China’s domestic corn yields are also on the increase but a reported 8% rise in Chinese corn harvest compares with a 9.06% increase in projected consumption.

Market analysts blame the U.S. drought for steady increases in U.S. export prices for corn, opening up the market for other exporters who can supply the grain cheaper.

The controversy over GM strains however worries Argentine exporters who have also looked elsewhere, including Ukraine, for alternative sources of corn for China’s agriculture and livestock industries.

Argentina is the second largest corn exporter after the United States and has suffered drought but not as widely as Australia, Russia and South Africa. A projected 20% decrease in Argentine corn output is creating a groundswell of discontent in Argentina’s farm industries.

Argentine President Cristina Fernandez de Kirchner is facing calls from farmers’ representatives for more government help. Fernandez is also facing calls to review agricultural policies that are discouraging farmers to plant corn for the 2012-13 season. Instead, many farmers are turning to production of soybeans, Argentina’s main farm export.

Source: United Press International (UPI) Inc. Dec 2012

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