Argentine edge seen vs US if Brazil buys
GM corn
Date: 19-Dec-02
Country: ARGENTINA
Author: Athena Jones and Reese Ewing
But firm domestic prices, new liquidity on the physical market and the
stronger real against the dollar have made Brazil less likely to turn
to the international markets for corn than it has been in recent
months, they added.
Brazil's new agriculture minister, Roberto Rodrigues, said on Monday
the country would need to import corn next year from transgenic
growers, such as the United States and Argentina. But GM foods are
currently forbidden by law in Brazil.
Traders said it was too early to try to determine the potential impact
of Rodrigues' statements since they might never actually be put into
effect. Argentina and the United States are the hemisphere's two main
growers of GM corn.
"So far there haven't been any big reactions in the market because
everybody knows that this is a new minister-elect who will be in
office starting in January and it remains to be seen if he really
carries this out or not," said a trader at the Argentine offices of a
major global grain firm.
Use of GM corn in Argentina has grown quickly in recent years and
traders and analysts estimate between 30 and 40 percent of Argentine
corn is transgenic.
Brazilian president-elect Luiz Inacio Lula de Silva's Workers' Party
is against the use of transgenic crops but has said it will listen to
scientific experts.
Paulo Molinari, corn and livestock specialist at Brazilian analysts
Safras e Mercado, added that it wasn't up to the Agriculture Minister
to decide whether Brazil imports GM.
"At this point, it is either a juridical question or a legislative
one," said Molinari referring to a case pending in the Supreme Court
which could give the Agriculture Ministry power to green-light some GM
imports like corn and to a far-reaching bill in Congress that would
define GM regulations.
IMPORTS SEEN FROM ARGENTINA, IF AT ALL
Traders say if shipments aren't already on the seas, they are unlikely
to arrive before the new harvest in January.
"It will also be difficult to import next year," a corn trader at
Cargill in Brazil. "The internal market is paying more for corn. With
prices as they are, corn is not likely to exported as it was in recent
months."
Traders also said producers are starting to sell their old crop stocks
as the end of the year and the new crop approached. This has improved
liquidity on the physical market, making it unlikely to import further
this year.
Despite a drought that had severely trimmed Brazil 2001/02 corn crop,
leaving the livestock industry with an estimated 1 million tonne
shortfall by the new harvest in January, local producers were recently
exporting because of the attractive prospects of earning dollars after
the Brazilian real had lost about 35 percent of its value in 2002.
The real has recovered some of its value in past weeks.
"Brazil probably won't import corn until perhaps 2003," said Molinari.
"The Northeast, which is most likely to import, will look to Argentina
when the harvest picks up there after March."
He said Brazil imported about 220,000 tonnes of corn in 2002. It is
unclear if the corn was GM or conventional. Brazil has imported GM
corn in the past when the lack of domestic supply jeopardized the
livestock industry.
It's agriculture department said Argentina had shipped an estimated
50,000 tonnes of 2001/02 corn to Brazil, the U.S. Department of
Agriculture said a shipment of 7.4 tonnes was destined for Brazil in
November and Brazil purchased a small shipment from Paraguay recently.
Corn imports from Argentina are tariff-free because Argentina is a
fellow member of the Mercosur trade bloc, which also includes Uruguay
and Paraguay.
"Argentina doesn't have tariffs and there are also the differences in
freight (tax) costs," said a Buenos Aires-based trader at a
multinational grain firm.
