China has lifted the ban on Brazilian soybean imports after agreeing to tougher sanitary standards, which should allow soy exporters to begin unloading their cargoes.
Some 23 soy exporters, including Bunge, Dreyfus, Cargill and ADM, had cargoes rejected in the past few months after Chinese quarantine officials said they had found traces of the fungicide carboxin in the cargoes. Chinese quarantine officials reportedly rejected five cargoes of Brazilian during that time, claiming the soy was for planting, not for human or animal consumption.
In response, Brazil’s Agriculture Ministry has tightened sanitary standards for soybean shipments, making them among the strictest in the world.
Under the agreement, cargoes that left before June 11 are to be inspected at Chinese ports according to the new sanitary norms. If less than one fungicide-treated seed per kilogram on average was found, the ships should be able to unload. Previously, China had said it would tolerate no traces of fungicide in Brazilian shipments.
Typically, however, for the Chinese trading environment, the accord is not being seen as a guarantee and whether Chinese quarantine officials will accept new shipments of Brazilian soybeans will only be known when new ships arrive.
Many saw the Chinese rejection of Brazilian soy as an excuse not to pay – reminiscent of so many letter of credit rejections by the Chinese over the slightest discrepancy that trade financiers have become used to. “Since when have the Chinese been concerned over health issues and pesticides
The new standards Brazil set earlier this month limits seed content in cargo to one seed per kilogram for soy intended for crushing and allows no seeds in beans that will be used for human or animal food.
China is the world’s biggest buyer of soybeans. Brazil, the world’s second-biggest soy producer exporting to the US, sees boosting trade with China a focus for reviving the economy from its biggest slump since 1992.
China bought 6% of Brazil’s US$73bn of exports in 2003, up from 1.4% in 1999.