BUENOS AIRES, March 9: Argentine grain traders hope a move by China that will effectively allow unhindered imports of genetically modified (GM) foods from the United States will lead to a similar deal for the South American nation.
Thursday’s deal should allow US GM soy and corn sales to the Asian giant. Months of deadlock on the rules had threatened to cause lasting damage to US soyabean trade with China worth about $1 billion a year.
Argentine traders said the deal could mean China will also soon loosen rules on Argentine soy imports. Some 90 percent of Argentine soy is GM soy and the country is the world’s No. 3 soy producer and exporter, after the United States and Brazil,
They will loosen the rules depending on how much soy they need. When they (China) need to buy and the South American soy prices look good to them, they will loosen the regulations, said a trader at a major multinational grain company.
Asian traders said no agreements had been reached yet for the South American cargoes as Beijing still had to announce details of how to apply for temporary safety certificates that would allow imports of GMOs, including soybeans.
But they also said China was eyeing cargoes for April shipment onward and it would likely turn to South America, which expects another record crop and is offering substantially lower-prices compared with the United States.
One trader said that US soyabeans were seen at around $199 per ton, C&F China, for late March shipment, while South American cargoes were offered at around $183 for April shipment.
The Argentine prices are good. They were already good in previous years and now with the devaluation they are even better, said a trader at a local brokerage.
Argentina’s trade should also be boosted by its currency devaluation in January that increased the competitiveness of the grain export sector whose costs are mostly in pesos but who sell on international markets at prices fixed in dollars.
Argentina is expected to have a record soy crop this year. The US Department of Agriculture forecast 2001/02 soy output at 28.75 million tons, compared with 26.7 million tons last year.
The USDA has estimated Argentina’s 2001/02 soyabean exports will reach 8.35 million tons, up from 7.45 million tons in 2000/01. It shipped 4.89 million tons of soy to China in 2001.
Brazil represents the biggest threat to Argentina. The USDA expects Brazil’s soy production to reach a record 43.5 million tons and forecasts soy exports at 17.9 million tonnes for the year. But traders said Argentina’s prices should be more competitive.
Operational costs in Argentina are lower, said a trader.
While most of Argentina’s soy is genetically modified, transgenic crops are illegal in Brazil, although the presence of such crops is common in some southern areas of the country.
As far as we know, there aren’t going to be any problems in terms of presenting the certificates they (China) want, said a trader.—Reuters