June 16, 2004

 

 

More Major Grain Companies Added To China's Soy Banned List
 

According to a Bloomberg report, a unit of Glencore International AG, two trading arms of Bunge Ltd. and 12 South American traders were suspended from shipping Brazilian soybeans to China, the world's biggest importer, because of contaminated cargoes.

 

China rejected two Brazilian shipments of soybeans in the southern Chinese cities of Xiamen and Shenzhen yesterday because of pesticide contamination. 15 traders are also suspended, China's quality inspection bureau said in a statement on its Web site.

 

Brazilian soybeans shipped by Cargill Inc., Louis Dreyfus and other trading companies have been rejected by China since April 29 because of contamination. Brazil, China's second-biggest soybean supplier, said on June 2 it may ask China to inspect beans at Brazilian ports to assure quality and prevent interruption of trade worth more than $2 billion a year.

 

"At least five shipments have been rejected at Chinese ports since late April,'' said Liu Aimin, a soybean analyst at Beijing Orient Agribusiness Consultants Ltd, an agricultural ministry affiliate. One ship carries around 55,000 tons, so the total loss from five shipments can be as much as $110 million, he estimated.

 

Trade

 

An official at Bunge's Shanghai office declined to comment or give his name. Eddie Xu, manager of the soybean department at Glencore's Hong Kong office, said the government's decision was related to the company's South American operations and he declined further comment.

 

Cargill Inc., Louis Dreyfus, ADM, Libero Trading, and other South American trading companies were included in earlier government bans. The Brazilian shipments were found to be contaminated with caboxin, a pesticide, China's government said.

 

Soybeans for July delivery yesterday rose 25.5 cents, or 3 percent, to $8.725 a bushel on the Chicago Board of Trade, the highest close for a most-active contract since May 25. Futures are up 56 percent from a year ago after an August drought last year caused a 12 percent reduction in the U.S. crop and Chinese imports surge to a record.

 

Processors in China have the capacity to crush 27.4 million tons of the oilseed in 2004, up from 26.4 million tons last year. Capacity rose 5.6 million tons between 2002 and last year, helping to boost its 2003 soybean imports by 83 percent to 20.7 million tons.

 

Recurring

 

China banned Brazilian soybean shipments several times in the past year because of sanitary problems. In November, Brazil pledged more inspections to ensure shipments meet international quality standards. Brazil shipped 6.5 million tons of the oilseed to China last year, valued at $2.2 billion.

 

Brazil started an inquiry into the illegal mixing of soy seeds with beans that led China to turn back some earlier shipments, Francisco Signor, head of the agriculture ministry's inspection office in Rio Grande do Sul state, said on June 1.

 

The agriculture ministry sent 22 inspectors to Rio Grande do Sul, Brazil's southernmost state, to check shipments, Signor said.

 

Producers found guilty mixing seeds with beans will have their crop banned and face jail sentences, he said.