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StarLink find may hit U.S. corn sales

(Thursday, Jan. 2, 2003 -- CropChoice news) -- Angus Chuang, Reuters, 12/30/02: TAIPEI - The United States may face an even tougher challenge competing with Chinese corn in Asia next year after the discovery of banned StarLink biotech corn in one of its cargoes to Japan last week, traders said on Monday.

Japan's Agriculture Ministry said on Friday that trace amounts of StarLink had been detected in a U.S. corn shipment bound for Tokyo's food supply, reviving memories of a previous StarLink controversy about two years ago that had a prolonged impact on sales to some Asian buyers.

"This is more very bad news for U.S. corn, which has been very much overtaken recently by the availability of Chinese corn. There will be more of a high alert in Japan," said one regional trader in Singapore.

China, which is threatening U.S. dominance in some Asian markets, is expected to maintain strong corn exports next year, helped by bumper domestic harvests and the lingering Starlink problems faced by U.S. exporters, industry officials said.

China is expected to export about 10 million tonnes of corn next year, maintaining this year's levels, said an official from Jilin Grain Group, one of China's two authorised corn exporters.

StarLink has been approved in the United States for animal feed but not for human consumption due to concerns that it might cause allergic reactions. But it is not even permitted for livestock feed in Japan, the world's top corn importer.

"Japan is the world's most sensitive market for health issues. The discovery is definitely going to force Japanese buyers to think twice before buying U.S. corn," said one trader with a foreign grain trading house in Hong Kong. "It's hard to say whether they will once again turn their back on U.S. corn, but short-term impacts are inevitable," the Hong Kong trader added.

The discovery of StarLink corn in taco shells sparked a nationwide food recall in the United States in 2000, prompting Japanese and South Korean importers to cut U.S. corn buying, and sending them scrambling to find other suppliers.

U.S. corn sales to top buyer Japan have only started to return to normal this year, while South Korean food processors have continued to shun U.S. supply for food use.


While U.S. corn exports to East Asia, already lagging last year's pace due to high prices, might suffer another setback from Starlink, traders said Taiwanese buyers might actually benefit from a dip in the U.S. market. Fears of a fresh backlash against U.S. corn weighed on Chicago Board of Trade market on Friday with nearby March delivery closing 3 U.S. cents lower at $2.39 a bushel.

"Starlink is not an issue here. But the apparent impact is that CBOT prices might come down, which is good for Taiwan buyers," said one Taipei-based trader.

An alternative source for some corn buyers might be China, but Taiwanese importers can only purchase from China until the end of this year after a trading window with the mainland was temporarily opened in October to alleviate supply tightness.

But a Japanese source said he was worried that no other source could meet Japan's massive U.S. corn import needs, totalling about 16 million tonnes a year for both animal feed and human consumption.

The United States is the dominant supplier to Japan, representing more than 90 percent of its total corn imports.

Crops in South America will not be available until March or April next year.