By Julie Ingwersen
CHICAGO (Reuters) - Problems with the toxic residue of a mold that attacked the 2012 drought-hit U.S. corn crop may worsen this summer and autumn as Midwest farmers blend off tainted supplies held in storage, grain experts say.
The substance, aflatoxin, is a chronic problem in dry, hot southern states like Texas where stressed crops are vulnerable to the mold. But in 2012, the worst U.S. drought in more than half a century extended the aflatoxin threat moved northward into the heart of the Midwest, resulting in the biggest outbreak since the 1980s.
"As we get into summer, you are going to see the worst of it," said Doug Bartlett, co-owner of Midwest Farm Services, an advisory service in Higginsville, Missouri. "We have tight corn supplies and when we get down to the nitty gritty, there is going to be a lot of the aflatoxin left over, and it will have to be blended off into the new crop," he said.
Aflatoxin can sicken humans and animals if ingested and is carcinogenic. So corn users - from pet food and livestock feed makers to vegoil and sweetener producers - test for it, and reject tainted supplies.
Ethanol makers, which consume 40 percent of U.S. corn output, can be even more picky because the aflatoxins concentrate during the distilling process, contaminating dried distillers' grains, a valuable ethanol byproduct sold for feed.
Months after the harvest, aflatoxin continues to cause headaches along the corn supply chain.
"From eastern Kansas across northern Missouri and up into central and southern Illinois - there is an area there that has significant aflatoxin issues," said Charles Hurburgh, an agricultural engineering professor at Iowa State University who specializes in grain quality.
TAINTED CORN BLENDED INTO FEED
Most of the contaminated corn is now being blended into feed for hogs and beef cattle, large animals that can tolerate low levels of aflatoxin.
Under guidelines from the U.S. Food and Drug Administration, certain types of feed can contain an aflatoxin concentration of up to 300 parts per billion. Human foods must contain less than 20 ppb, while the threshold for milk is even lower, at 0.5 ppb.
For the export market, outbound U.S. corn must also test at less than 20 ppb.
Cows that eat tainted corn can pass on aflatoxin through their milk. Dairy processors in the St. Louis area have had to dump loads of milk found to contain elevated levels of aflatoxin, said Max Hawkins, a nutritionist with Alltech, a Kentucky-based feed supplement company.
"Aflatoxin and spring weather - that is their major, major focus right now," Hawkins said.
The mold that causes aflatoxin can spread inside grain storage bins as temperatures rise in spring, creating the potential for a second wave of problems after the initial outbreak at harvest.
"We've already seen some flourishing of the molds that can produce aflatoxin," said Hawkins. "Because corn is in short supply, everybody wants to get every kernel, everything they can out of the bin," Hawkins said.
"As the bin is emptied, those damaged kernels tend to concentrate in the bottom area....There is ample aflatoxin present in many, many storage facilities," Hawkins said.
Several major Corn Belt states, including Iowa, Illinois, Indiana and Nebraska, received temporary approval from the FDA last fall to let grain handlers blend corn containing aflatoxin with clean grain, and some of those states have extended the blending allowances into this summer.
Corn handlers have stepped up testing for aflatoxin but sampling the grain can be difficult since contamination levels vary greatly.
In February, the Hy-Vee Inc grocery chain recalled five product lines of its privately branded dog food due to elevated levels of aflatoxin in the corn used to make the pet food. The products were manufactured at a plant in Kansas City, Kansas.
U.S. corn stocks are historically tight, with the U.S. Department of Agriculture projecting a 17-year low by August 31, the end of the 2012/13 marketing year. Cash corn prices remain strong because buyers are scrambling to cover their needs through the summer and up until the 2013 harvest.
Aflatoxin has complicated that job, forcing some to source grain from farther away.
"It's a difficult year in working through this crop," said Jeffrey Adkisson, executive vice president of the Illinois Grain & Feed Association. "It's probably one of the most challenging years some of our people have had to go through."
(Additional reporting by Christine Stebbins; Editing by Leslie Gevirtz)