The big news in the corn market comes from China: Corn rejected

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Improved weather, tough farmers and big iron got the crops planted across the Midwest this spring. The weather scare that had us looking at late crops, less corn and more beans, and reduced yields has become a weather forecast for good crops.

Yes, there is catch-up planting of soybeans and some corn will never be planted in Michigan, Wisconsin, and Minnesota, but the markets have declined rapidly as the fear has gone out of it.

In non-weather news

The big news this week was not planting, but the announcement that China will no longer issue permits to import U.S. DDGs.

We are back to another round of the trade wars that started 10 years ago with the “frankenfood” movement. This is the fear of genetically engineered organisms (GMO’s), and the idea that they are not safe in the food chain. These fears have mostly gone away in Europe, but a problem sending corn and corn products to China has emerged this year.

At issue is the MIR 162 strain developed by Syngenta AG. Cargoes that had previously been imported have been quarantined in China. Now they are being ordered back out of the country and new cargoes are being rejected.

There had been the idea that China would yield and OK the product, and I suppose that could still happen eventually.

Not going away

This problem has been simmering quietly in the grain industry for some time. Everyone hoped it would go away, and it hasn’t.

The problem starts at the farm level, where the farmers know what seed they planted. The elevators and processors do not have the ability to test for the gene, so they are starting to add clauses to the boilerplate portions of contracts to protect themselves.

The problem is that a little of the corn taints the whole system, and that carries through to the distillers grains that come out of the ethanol plants.

A few weeks ago, I was contacted by a company that represents a seed company. The agent told me they were tasked to make sure the farmers who planted the seed had markets. He asked me where my corn went. Then, he contacted those processors to talk to them.

May not take corn

I noticed that soon the companies I referred him to had added language to their websites to warn farmers of the problem.

Here are two examples taken off the Web this morning:

First, “In response to recent rejections and tightening export regulations, some of our end users have chosen not to accept grain containing unapproved GMO traits, including Agrisure Viptera (MIR-162) and Duracade. As a result, Town & Country may not be accepting corn that contains these traits.”

Then there is this: “Please Note: PGP may not be accepting corn containing unapproved traits that could go for exports. This includes Agrisure Viptera (MIR 162) trait and the new Duracade trait. We encourage you to plant varieties that are approved in the US, EU and China. If you have any questions please ask. We hope the approval process happens quickly and will eliminate any further issues.”

Stay tuned for further developments. Please market corn responsibly.

The ethanol producers have been making record margins in recent weeks. This is good for all of us. It helps the price of grain, helps our balance of trade, and provides jobs in the ag sector.

China has quickly become the biggest home for DDGs. The export price for them fell 10 percent in one day Monday.

Market reaction

A quick look at prices show that we have dropped nearly 80 cents a bushel in old crop corn prices in a month. The new crop has dropped 70 cents. The old beans had held off the drop, but has suddenly lost 85 cents in two weeks.

The new crop has lost almost 80 cents since May 22.

About the Author

Marlin Clark trades producer and elevator grain from an office near Andover, Ohio for Town & Country Co-op. You can reach him for comment at 440-293-4055. More Stories by Marlin Clark

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