Argentina will not export corn to China until a deal is reached over the genetically modified crops, which are favored by farmers in the South American country but currently barred by Beijing, an industry group said on Wednesday.

In February, Argentina announced an agreement with China on corn exports. Chinese authorities said the pact took effect on April 20, which raised market expectations that ships laden with corn from the Pampas would soon start heading to China.

But the head of Argentina's Maizar corn industry group said on Wednesday that Argentine farmers, eager to compete with U.S. growers for the Chinese market, would have to wait.

"There will be no exports of Argentine corn to China until the various types of genetically-modified corn are approved," said Martin Fraguio of Maizar.

The two countries reached agreement on April 20 on some varieties of corn, but have not settled differences regarding GMO corn, he said.

An Argentine agricultural official was not immediately available for comment on an official Chinese statement, which said import inspection authorities "had signed an agreement, which granted approval for Argentine maize and corn imports into China."

Grain powerhouse Argentina wants to optimize farm sector income to help its economy resist fallout from Europe's financial mess and slowing demand from key trade partner Brazil.

But even if Argentina could export corn from the 2011/12 crop year, which is now being harvested, shipments would be limited by low yields caused by a drought that parched the Pampas farm belt during the Southern Hemisphere summer in December and January.

According to the U.S. Department of Agriculture (USDA), Argentina should export 14 million tonnes of new-season corn, down from 16 million tonnes in the 2010/11 crop year.

Chinese demand for corn imports may remain high after excessive rains in its northern corn belt last year reduced the quality of the crop there.

The Asian giant is already a major importer of Argentine soybeans, which are processed into soymeal used to feed cattle needed to keep up with demand as China's rapidly growing middle class acquires a taste for beefsteak.

Grains exporters with operations in Argentina include Cargill Inc, Bunge Ltd, Molinos Rio de la Plata , Noble Group Ltd and Louis Dreyfus.