WASHINGTON: Foreign wariness over StarLink biotech corn -- never approved as a food -- was cutting into U.S. corn (maize) sales,  helping push prices to their lowest levels in about 15 years, the U.S.  Agriculture Department said on Thursday.

In a monthly look at crops and food demand worldwide, the department shaved 50 million bushels from its forecast of corn exports ``because some importers, like Japan, are expected to minimize purchases of varieties of corn not approved for some, or all, uses,'' a description fitting StarLink.

More than 300 foods were pulled from U.S. grocery store shelves last year following the discovery that StarLink, approved only as a livestock feed and not for human consumption, had
seeped into the food chain.

The environmental group Greenpeace said on Thursday that it sponsored tests that found traces of StarLink in meat-free corn dogs produced by a Kellogg Co.'s (NYSE:K - news) natural foods subsidiary, Morningstar Farms. Kellogg has not decided whether to recall the products, but has contacted U.S. food regulators and has hired an independent laboratory to test the products, the Los Angeles Times reported.

LOWEST CORN PRICES SINCE THE MID-1980s

Exporters have endured repeated jitters over assuring that shipments would comply with foreign refusal to buy any cargo with StarLink kernels in it.

Japan, the No. 1 market for U.S. agricultural exports, briefly suspended purchases of U.S. corn last fall until testing began to assure purity of its shipments.

StarLink was genetically altered to produce a natural pesticide that would drive away harmful insect pests.

On Wednesday, the Agriculture Department said it would pay seed companies for bags of hybrid seed tainted with the StarLink protein. Up to 400,000 bags might be purchased.

In its report on crops, the Agriculture Department projected that farm-gate prices for corn would average $1.85 a bushel, lowest since the farm recession of the mid-1980s.

Analysts agreed StarLink was a factor in grain prices but there were no definitive figures on its impact. ``People (buyers) are being extra-protective,'' said private consultant John Schnittker.

``They (the government) can reference it and the trade talks about it,'' said senior analyst Ben Beneke at the consulting firm World Perspectives, but it was difficult to quantify in the highly
competitive export market.

U.S. farmers grow half of the world's corn, and exports, now estimated at 2 billion bushels (50.8 million tonnes) this year, account for nearly two-thirds of corn exports. China, Argentina and Europe also are large exporters.

OTHER CROPS SUFFER FROM LOW PRICES TOO

The Agriculture Department said a flood of soybeans from South America would dent U.S. soybean prices even with  China importing 9.3 million metric tons of soybeans, 700,000 tonnes more than earlier forecast.

Farm-gate prices for U.S. soybeans were projected to average $4.55 a bushel for the marketing year ending August 31, lowest in 28 years and down 10 cents from a February estimate.

Brazil was in the early stages of a harvest forecast for 35.5 million tonnes of soybeans, 1.5 million tonnes more than a year ago. Argentina was forecast to reap a record 25 million tonnes, 3.9 million tonnes more than the preceding crop.

U.S. cotton growers faced pressure as well with exports slowing and U.S. textile mills cutting back on usage. The U.S. stockpile would reach 4.8 million bales, each weighing 480 pounds, this
summer, the largest surplus in 12 years.

Private consultant John Schnittker said the report made trivial changes in the farm outlook while attention was turning toward the spring planting season. The government will report March 30 on likely sowings of major crops.

Farm groups were calling on Congress to provide $9 billion in ``market loss'' payments this year to offset the impact of persistently low prices. Lawmakers have enacted more than $24 billion in farm bailouts since late 1998.

``The die is cast for this year,'' Schnittker said -- large stockpiles of U.S. crops and ``absolute assurance of low prices'' unless bad weather hits this year's crops.

Analysts commonly expect the March 30 Prospective Plantings report by the Agriculture Department to show a continued shift by farmers into soybeans while cutting back on corn and
wheat plantings. Cotton seedings would hold steady.