UPDATE 2-China's Wen signs accords, eyes Argentina's corn

Tue Jun 26, 2012 7:54am IST

* Chinese premier on official visit to No. 2 corn exporter

* Traders say corn exports to China hinge on GMO approvals

* Wen also signs series of transport finance agreements

* "Corn is a diplomatic (Adds details on other finance accords)

By Maximilian Heath

BUENOS AIRES, June 25 (Reuters) - Chinese Premier Wen Jiabao said China is interested in buying more corn from Argentina, the world's second-biggest supplier after the United States, a senior Argentine Agriculture Ministry official told Reuters on Monday.

Argentina signed a deal with China on corn exports earlier this year, raising market expectations that Argentine corn would soon start heading to the world's most populous country.

However, traders and export industry sources say it is still unclear whether Argentine corn can enter the Chinese market because the accord did not cover some of the genetically modified strains produced in the South American country.

"(Wen) said during the meeting (with Argentine officials) that they're interested in buying more corn from Argentina," Oscar Solis, deputy agriculture secretary for added-value and new technologies, told Reuters without giving further details.

Wen, on an official visit to Argentina, signed a series of accords after meeting President Cristina Fernandez on Monday.

"Corn is a kind of diplomatic commodity. The trading volume much depends on how good the bilateral relationships are," a trader said, adding that rising Chinese imports of U.S. corn were largely aimed at helping balance bilateral trade.

Traders say that as long as Argentine farmers grow the same kind of GMO corn as U.S. producers do, China should have no problem importing Argentine corn. China has approved 12 GMO corn strains for import.

Argentina is forecast to sell abroad 13 million tonnes of 2011/12 corn and 16 million tonnes of the 2012/13 crop, according to the U.S. Department of Agriculture.

Chinese corn imports are forecast to increase to 7 million tonnes in 2012/2013, due in part to rising livestock and industrial consumption, a report this month by a USDA attache in China said.

Wen, who is due to end his Latin American tour in Chile on Tuesday after also visiting Brazil and Uruguay, asked leaders of South American trade bloc Mercosur to look into the possibility of a free-trade deal with China.

China, the world's second-biggest economy, is a key market for many of the region's farm exports and has invested heavily in Argentina's energy and agricultural sectors in recent years as it seeks to guarantee future supplies.

One of the accords signed during Wen's visit was a roughly $2 billion low-interest loan package to finance the modernization of the Belgrano Cargas railway, a 1,500-km (930 miles) route that stretches into important soy-growing regions in the north of the country, the Economy Ministry said.

China is a leading buyer of Argentine soybeans and soyoil.

Argentina's total exports to China totaled $6.24 billion last year, while Chinese imports to Latin America's No.3 economy reached $10.57 billion, according to government data. (Additional reporting by Niu Shuping in BEIJING and Helen Popper in BUENOS AIRES; Writing by Helen Popper; Editing by Paul Tait)