Wheat in Chicago fell, headed for the biggest monthly loss since February, after Japan suspended imports from the U.S., where the government discovered an unapproved, genetically modified strain growing in an Oregon field.
Japan, the biggest buyer of U.S. wheat behind Mexico, suspended imports of western-white wheat and feed wheat from the U.S., said Hiromi Iwahama, the director for grain trade and operation at the agriculture ministry. Scientists said the rogue wheat in Oregon was a strain tested from 1998 to 2005 by Monsanto Co. (MON:US), the world’s top seedmaker. Japan also canceled a purchase of 24,926 metric tons of white wheat.
The finding may hurt U.S. export prospects at a time when the U.S. Department of Agriculture is expecting record global production, boosted by a 48 percent increase in Russian output and a 40 percent gain from Ukraine. Exports from the U.S. probably will fall 9.8 percent to 25.2 million tons in the year that starts on June 1, according to the USDA.
“This is not something we need to see when exports are suffering anyway,” Darrell Holaday, the president of Advanced Market Concepts in Wamego, Kansas, said in a telephone interview. “It’s a negative story during a negative export time, and if the Black Sea keeps getting rain it’s going to be a tough, competitive wheat market.”
Wheat futures for July delivery fell 0.6 percent to settle at $6.9875 a bushel at 1:15 p.m. on the Chicago Board of Trade. The price is down 4.4 percent this month, partly because the USDA on May 10 forecast global growers would harvest 701.1 million tons.
Japan is Asia’s largest wheat buyer after Indonesia, with imports forecast at 5.89 million tons in the 2012-2013 season, little changed from the previous period, according to the London-based International Grains Council.
Japan imported 5.62 million tons of milling wheat last fiscal year, of which 3.26 million tons, or 58 percent, were from the U.S. Canada was the second-largest supplier to Japan, with 1.32 million tons, while Australia was the third with 1.03 million. Japan imported 867,000 tons of western-white wheat from the U.S. in the year ended March 31, data from the Agriculture Ministry showed.
“If there really are major concerns and Japan continues to cancel and buy elsewhere, that could weigh on Chicago,” said Paul Gaffet, an analyst at Offre & Demande Agricole in Bourges, France, which advises 5,000 farmers on crop sales.
The USDA said yesterday it was investigating how the unapproved seeds were growing nine years after St. Louis-based Monsanto ended its wheat program.
The European Commission, the EU’s executive arm, contacted Monsanto seeking a method to detect its modified wheat and advised member countries to test imports of soft-white wheat, according to an e-mailed statement. The soft white variety makes up 80 percent of annual EU purchases of U.S. wheat, it showed.
Spain imported 477,946 tons of U.S. wheat last year costing 105 million euros, while Italy bought 379,689 tons for 120 million euros, EU trade figures show.
“This raises doubts,” said Arnaud Saulais, a grain broker at Starsupply Commodity Brokers in Nyon, Switzerland. “At the start of things like this, it’s hard to say whether it will be big. It’s like bird flu. You don’t know if it will stay local or go worldwide.”
The EU in September 2009 quarantined most Canadian linseed, or flax seed, after the discovery of cargoes contained a genetically modified variety known as Triffid that was never released for commercial production. Exports to the EU failed to recover, slumping to 14,828 tons in 2012 from 336,844 tons in 2008, trade data show.
Japan banned imports of U.S. beef in 2003 after a case of mad cow disease, or bovine spongiform encephalopathy, was found in an animal in Washington state. It eased restrictions last year, nearly a decade later, allowing imports of beef from cattle less than 30 months of age as of Feb. 1. Prior to that date, it only allowed meat from animals 20 months or younger.
“Japan may say some things publicly, but they have good qualitative and quantitative arrangements with farmers for that type of wheat,” Advanced Market Concepts’ Holaday said. “We have experience with Japan, and it took them a long time to see the light on the BSE side of things.”
Corn futures for delivery in December fell 0.5 percent to $5.6275 a bushel in Chicago, the first drop since May 17. Soybean futures for delivery in July slid 0.4 percent to $14.9575 a bushel on the CBOT.
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