Syngenta GM Corn Has Nowhere to Go

Well, that's that. Within a week of two grain processors telling biotech Syngenta (NYSE: SYT  ) they won't accept delivery of corn that's genetically modified with the Duracade trait, two more processors have delivered the coup de grace and said they'll also refuse its delivery. It's clear Syngenta has little hope of ever getting this seed commercialized now.

Grain elevator. Source: SXC.hu.

Last week, both Bunge (NYSE: BG  ) and Cargill said that with China refusing to accept the GM corn, they wouldn't accept it for export, either. While the FDA has signed off on the genetic engineering making this year's crop the first one to be planted with the trait, the largest export markets haven't signed on, and where smaller markets might accept the crops, the risk of contaminating shipments to China and the EU is simply too large to take. 

Now both Archer Daniels Midland (NYSE: ADM  ) and Consolidated Grain and Barge, a subsidiary of ITOCHU, a Japanese import-export company that operates grain elevators and bulk handling facilities in the Midwest and is also a big shipper of grain on the Mississippi River system, have joined the chorus saying they, too, will not accept Syngenta's Duracade corn. ADM went even further suggesting that farmers who bought seed that's not accepted for export by all trading partners to try to exchange it.

So far only Marubeni's Gavilon grain trading division has said it will accept Duracade crops, essentially leaving only Louis Dreyfus as the remaining major exporter that has yet to say yea or nay. With the vast bulk of the industry going against Syngenta, though, it seems likely that it too will err on the side of caution in accepting such crops.

In December, China refused acceptance of 665,000 metric tons of corn and byproducts because it tested positive for the presence of Syngenta's Agrisure Viptera, a genetically modified insecticide that's also not approved in many areas. The problem with the Viptera trait is that it becomes concentrated when the corn is refined for ethanol. It gives the resulting distillers dried grains with solubles (DDGS) excessive levels of the protein. Bunge and Consolidated haven't accepted Viptera either, and though Syngenta sued Bunge for doing so, a court ruled it was a valid and reasonable business decision for it to make.

Source: Syngenta.

As the wheels come off Syngenta's GMO corn, Monsanto may see similar fallout particularly as France seems ready to ban once again its MON 810 maize as well as impose new restrictions on Pioneer 1507, a GM maize developed by DuPont and Dow Chemical. Russia is pondering whether to simply ban all GMO crops. 

With the industry almost completely arrayed against it, Syngenta has little hope of seeing its Duracade trait become a commercial success. Farmers have little incentive to plant the crop now and if foreign markets continue to reject its lab creations, there will be fewer reasons for the biotech to create them. Having once proclaimed all was well, Syngenta's wall of denial seems to be crumbling around it.

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Help us keep this a respectfully Foolish area! This is a place for our readers to discuss, debate, and learn more about the Foolish investing topic you read about above. Help us keep it clean and safe. If you believe a comment is abusive or otherwise violates our Fool's Rules, please report it via the Report this Comment Report this Comment icon found on every comment.

  • Report this Comment On February 27, 2014, at 11:50 AM, erk1977 wrote:

    Another terribly uniformed article.

    -Only a small percentage of US grain is actually exported. Most is used for animal feed and ethonal in the US. There is a very large market out there for grain approved in the US. Both Viptera and Duracade are approved in the US.

    -Syngenta is selling Duracade only to growers who will channel their grain with Gavalon. This is a limited launch.

    -China is accepting Viptera grain from South America and also is no longer rejecting DDGs. They are only rejecting US grain. If you cannot see this as politically motivated, then you are not paying attention.

    -France has never sold any significant amounts of seed with MON810 and 1507. Their ban is on growing the seed in country, this does not affect grain usage. For what it is worth Spain has used MON810 for years. MON810 is no longer sold in any volume in the US as Monsanto as moved on to new GM traits.

    -The bottom line is that Duracade sales will be limited until China approves the traits, but farmers definitely want it and will use it.

    It would be nice if you did some real research before writing articles. .

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