ADM Archer Daniels Midland Company

U.S. grain companies plan to reject Monsanto Co.'s new genetically modified soybeans, over concerns that they could disrupt international trade without a key regulatory approval from the European Union.

Trade groups representing Cargill Inc., Archer Daniels Midland Co., Bunge Ltd. and other grain companies blasted the biotech seed company's decision to sell the seeds before first securing an approval required to ship the crops to the EU, according to a letter reviewed by The Wall Street Journal. They are pressuring Monsanto to detail how it plans to keep the new soybeans from entering export channels.

The grain companies' stance is a potential blow to a product that Monsanto has touted as a blockbuster for U.S. farm fields. The St. Louis company this spring aimed to sell to U.S. farmers about 3 million acres' worth of the new soybean seeds called "Roundup Ready 2 Xtend." Grain traders could decide to accept the soybeans if EU officials approve them for import before U.S. farmers begin harvest this fall. Monsanto expects approval in the near future, a company spokeswoman said. Representatives for the EU didn't respond to requests for comment Monday.

"Monsanto's actions with respect to RR2X soybeans are an unacceptable and very troubling development, and we urge that it not be repeated," wrote the heads of the National Grain and Feed Association, the North American Export Grain Association, and the National Oilseed Processors Association in the letter.

The private dispute reflects commodity traders' growing concerns over seed companies' efforts to market new genetically engineered crops. Agribusiness groups estimated that grain traders lost hundreds of millions of dollars after Chinese authorities in late 2013 began rejecting shipments of U.S. corn that contained unapproved genetics developed by Swiss seed firm Syngenta AG, which led to lawsuits by traders and farmers.

The latest Monsanto seeds contain new genetic technology that allows soybean plants to withstand a new and more powerful herbicide, as farmers battle weeds that have evolved to resist Monsanto's signature Roundup spray. Monsanto projected that by 2019 two-thirds of all U.S. soybean fields will be planted with seeds containing the new genes.

Soybeans are the second most widely-grown crop in the U.S. after corn, and the EU is the second-largest foreign market for the oilseed, accounting for about 9.8% of all 2015 exports, the USDA estimates.

The letter comes after global grain merchants Bunge Ltd., Archer Daniels Midland Co. and Louis Dreyfus Co. in recent weeks notified farmers that their U.S. facilities wouldn't purchase soybeans grown from seeds that contain Monsanto's new crop genes, sending out letters and hanging up signs at grain elevators. U.S. farmers have officially kicked off soybean planting, sowing about 3% of this year's anticipated crop as of April 25, according to the USDA.

A Monsanto spokeswoman said the company has "regularly and transparently communicated" with farmers and grain companies about the soybeans' regulatory status, and will respond to the grain groups' concerns "as appropriate." The company continues to expect EU approval for the soybeans in the near future, she said.

Monsanto and DuPont Co., which has licensed the new herbicide-resistance genes from Monsanto for DuPont's own soybeans, began marketing the new seeds to farmers this year under the assumption that the EU would have approved them by now. Both companies now are offering to replace the new soybean seeds with other versions that already are approved by global import authorities, according to their spokeswomen.

Hugh Grant, Monsanto's chief executive, told investors last month on a conference call that the European Union's review continued to drag on despite EU food safety authorities signing off on the soybeans last June. Soybeans are Monsanto's second-biggest source of seed sales, generating about 15% of the company's revenue in 2015.

"For that [EU] administrative process to follow on behind that would normally be months," Mr. Grant said. "We're sitting here in the spring of a new year still waiting, so an unusually slow delay even for Europe and very frustrating."

Write to Jacob Bunge at jacob.bunge@wsj.com

(END) Dow Jones Newswires

May 02, 2016 15:55 ET (19:55 GMT)

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