Spain's grain trade eyes Argentina's GMO maize imports

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By Martin Roberts

MADRID (Reuters) - Spanish grain traders and consumers hope the European Union will soon permit import of a variety of genetically modified maize that would allow supplies from Argentina to ease sky-high prices.

EU rules currently allow imports of GA21 maize as long as it is processed, for example as corn gluten, but not in the form of grain. The GA21 gene is resistant to the herbicide glyphosphate.

Argentina, the world's second-biggest maize exporter after the United States, banned the sale of GA21 last year due to EU import restrictions.

A spokesman for Swiss biotech company Syngenta, which currently has the legal rights to GA21, expected an EU council of agriculture ministers on February 18 to formally approve imports of the gene-spliced maize in grain form.

GA21 approval is not on the agenda for the meeting, but the spokesman expected the issue to arise and new import rules to come into effect about a month later.

Jorge de Saja, director of the Spanish Feed Compounders' Association, CESFAC, doubted imports would arrive before May, or in about three months before the domestic maize harvest begins.

CESFAC accounts for about 80 percent of Spain's 21 million ton-per-year feed industry.

"Any further delays would have a clearly bullish effect on prices, as French maize, which has so far been uncompetitive, would then be able to enter the market," he said.

"Traders can already begin the logistical preparations for importing (GA21) maize, even if they don't dare bring any yet."

Juan Gear, vice president of Argentina's Maizar agroindustrial association, praised the possibility that the European Union would open its market to GA21.

"This would be good because it would eliminate an obstacle Argentine maize faced and put it on equal footing with maize from other origins, such as Brazilian grains, which are not genetically modified," Gear said.

The restrictions on the GA21 variety and the red tape involved in exporting to Europe had meant Argentine exporters were often squeezed out by Brazilian suppliers, he said.

Gear estimated that Argentine corn exports could reach 16 million tons in the 2007/2008 season, compared with the U.S. Department of Agriculture's forecast of 15 million tons.

Dealers said they doubted much maize from any origin would enter Spain before the end of March, as most consumers were covered until then. Few buyers were in the market for April-June due to extreme volatility.

"There are sellers out there, but with all the uncertainty no one has a clue what to buy," one importer said.

Traders say prices have tended in recent sessions to vary by as much as 25 euros a ton, but maize at an approximate mid-market quote of 220 euros in leading grain port Tarragona is still much cheaper than feed wheat at 265.

Even after a bumper harvest like last year, Spain still has a structural deficit and needs to import grain to meet demand. Last year, maize imports soared and wheat dropped as wheat prices overtook maize for the first time in years.

The latest figures from the Trade Ministry show than maize imports for January to November 2007 rose to 6.1 million tons from 3.7 million in the first 11 months of 2006. Wheat imports sank to 3.1 million tons from 4.8 million in the same period.

Brazil and Argentina were big beneficiaries, with their maize exports to Spain meanwhile jumping to 2.8 million and 1.8 million tons from about 400,000 tons each previously.

France, traditionally a big supplier of grain to Spain, lost out and saw exports to its southern neighbor decline to 1.2 million tons from 1.6 in the same period.

(Additional reporting by Nicolas Misculin; Editing by Marguerita Choy)

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