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Wheat Falls as Japan Suspends U.S. Imports on Biotech Crop Find

May 30, 2013

May 30 (Bloomberg) -- Wheat in Chicago fell the most in two weeks 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., 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 1 percent to $6.9575 a bushel at 9:53 a.m. on the Chicago Board of Trade. A close at that price would be the biggest drop since May 15. The price through yesterday dropped 3.9 percent this month, partly because the USDA on May 10 forecast global growers would harvest 701.1 million tons.


Import Estimate

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.


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