January 21, 2005



China, Brazil agree on soy, soyoil trade


China and Brazil have reached an agreement on quarantine issues for farm products such as soy and soyoil that should help prevent possible trade disruptions ahead of the South American harvest season, an Brazilian Agriculture Official said.


Gilson Westin Cosenza, from the Agriculture Ministry of Brazil, said China's quarantine authorities had provided assurances its new sanitary standards for crude soyoil would not hamper trade.


China, the world's top soy importer, has also promised Brazil that it will not immediately reject soy cargoes from Brazil, even if it found some toxic fungicide carboxin, sprayed to combat damage from rust disease.


Shipments of more than 300,000 tons of soybeans from South America were rejected by China last year on grounds of pesticide contamination. This was because of China¡¯s past policy of zero-tolerance on carboxin, causing large losses to Chinese soy buyers and suppliers.


China also raised purity standards on soyoil in October and this month suspended purchases of South American soy on concern about genetically modified beans, Brazil said.


When asked about trade in genetically modified (GMO) soybeans from Brazil, Westin said, "There's no problem in this area. New documents have already been provided."


A Chinese ministry of agriculture official confirmed that applications could proceed for certificates to import GMO soybeans from Brazil. Beijing had stopped accepting such applications from the start of the year, saying it was waiting for new documents from Brazil, certifying the safety of its oilseed.


This has not gone down well with Chinese buyers and international suppliers ahead of the South American soy season in March, after a series of recent trade spats. China imported 18.03 million tons of soybeans in the first 11 months of 2004, including 5.49 million tons from Brazil. Soyoil imports totaled 2.39 million tons, with 802,591 tons from Brazil.


A spokesman for the General Administration of Quality Supervision, Inspection and Quarantine of China said China had told Brazil its new standards would not cause problems.

This week's talks follow a visit to Brazil by Chinese President Hu Jintao's in November, when the soy trade dispute was discussed. Agricultural officials from both countries are expected to next meet on talks over the residue level of carboxin, a form of pesticide.


On Oct. 1, China limited the hexane level in soyoil imports to no more than 100 parts per million in unrefined soyoil, higher than the industry standard of 600 parts, according to the American Soybean Association.


Hexane is a derivative of petroleum used to extract soyoil and Brazilian soy oil typically contains about 600 parts to 800 parts per million.


Brazil's soybean crop may be 23 percent bigger than last year at a record 64.5 million tons this year, the U.S. Department of Agriculture said this month.


China, the world's biggest soybean importer, is forecast to import 22 million tons of soybeans in the year ending Sept. 30, 30 percent more than the 16.9 million tons in the year earlier, according to the U.S. Department of Agriculture. The country typically buys soybeans from the U.S., Brazil and Argentina to meet about half of its demand for the beans used to make tofu, cooking oil and animal feed.

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