China has initiated a tough crackdown on U.S. food imports, rejecting "rancid" pistachio nuts and promising more tough inspections. U.S. exporters call the accusation a low blow whose effects are being felt in all nut-producing regions.
In the stock market, nut futures ended the day sharply lower after riding high for most of the day. "We're bracing for another knee-jerk reaction to the nut market," said one nervous futures trader. A "short" trader blamed the slumping nut rally on price volatility in a mature market causing wide swings in nut commodities. "You expect nuts to drop eventually," he said, "but it's sooner than expected for some."
All this comes in reaction to the U.S. rejecting suspect Chinese food and drug ingredients. China told inspectors to step up checks of pistachio nuts from the United States after one shipment with rotting nuts and infested with ants was destroyed. U.S. exporters are desperately trying to do damage control. "It's kind of hard to get people to grab your nuts [off the shelves] when they're buggy," said an industry spokesman.
There have been a series of health scandals involving Chinese food, drugs and other products including poisoned cough syrup and pet food. This has led many to question if the Chinese nut busting is retaliatory in nature. Others suspect that China is simply trying to support their own small, developing domestic nut sector.
In a related story, China also warned of unspecified countermeasures if U.S. Congress adopts a bill on China's exchange rate that could lead to U.S. tariffs on Chinese imports. As one Chinese delegate who refused to be identified remarked, "And you think you have crap in your food NOW!"
