Corn Drops With Decreasing Demand for U.S. Exports in China

Corn for July delivery in Chicago fell, extending four weeks of decline.
Corn for July delivery in Chicago fell, extending four weeks of decline.

According to a recent Bloomberg article, corn for July delivery in Chicago fell for the fourth straight week on speculations that demand for U.S. exports will decrease after China slows purchases of a feed ingredient made from grain.

The quarantine agency in China has suspended issuing permits to import U.S. dried distiller’s grains, or DDGS, according to three trading executives whose applications were denied. According to a source that has requested to remain nameless, the government considers DDGS to be a high risk of containing MIR 162, a genetically modified strain of corn that China has not approved.

Dave Norris, an independent grain broker in Harrogate, England said in the Bloomberg article, that corn “is down today on the back of that Chinese news. It seems to put resolving the MIR 162 issue even further away down the line.”

China is the largest purchaser of DDGS, a livestock that is created when corn in stripped of starch when making ethanol. U.S. corn shipments to China dropped during restrictions on the MIR 162, while imports of DDGS steadily rose because of lenient port officials. U.S. Department of Agriculture data shows that China was the third biggest importer of U.S. corn in 2012 and 2013, just below Japan and Mexico.

Because of the steady decline in corn, farmers are no longer expecting the crop to be more prosperous than soybeans. This could be another factor leading farmers to be more reliant on their soybean production.