US soy cargo held in China due to quality concerns

Chinese traders who originally booked two US soy cargoes have switched to South American ones while the Chinese quarantine authority is holding one US soy cargo at Ningbo port due to quality concerns.

Nonetheless, traders did not expect many to cancel the US orders as most buyers have already paid deposits and freight costs.

Expectations of record harvests in Brazil and Argentina have driven down the Chicago Board of Trade soy prices to 3-½ month lows on Wednesday (Jan 27).

Before the price fall, Chinese buyers had booked nearly 21 million tonnes from the US, to take advantage of good crushing margins earlier, which have now dropped to break even or even negative.

Soy imports in January and February were also seen staying high at more than four million tonnes each month while domestic demand for feed meal was falling after lots of livestock were slaughtered before the Lunar New Year.

The Lunar New Year holidays fall in the middle of February, when crushers also shut operations.

One executive with a local crusher near Ningbo, Zhejiang province, said a local quarantine authority was holding one of its US soy cargoes after some red seeds were found.

One official with the Ningbo quarantine bureau said the bureau was still testing the cargo and no final decision had been made, but added the problem was not serious.

The coated seeds with red substances are not allowed in China to be processed for human consumption, but quarantine authorities normally require crushers to remove these from the cargo.