China eyes Brazil, US soyoil supply on Argentine ban

China is seeking supplies of soyoil from Brazil and the US as it keeps an embargo on imports from Argentina, two company executives with direct knowledge of the matter said.

The Ministry of Commerce told three companies, including COFCO Ltd., at a meeting last week to source supplies from those countries instead of Argentina, said the executives.

Soy in Chicago have increased 5.5% since the start of April on speculation China will increase imports of soy for crushing to replace Argentine oil. China's importers have no plans to load shipments of Argentine material in May and did not take any in April, the China National Grain & Oils Information Center said.

According to analysts, traders have been trying to get out of contracts with Argentine suppliers and switch to Brazil, noting that soy imports in second quarter is expected to surge.

The Asian nation halted shipments from the world's biggest supplier of soyoil as part of a trade dispute. The country's soy imports may reach a record 14 million tonnes between April and June, the grain and oils information centre said April 28.

China Grain Reserves, also known as Sinograin, last month cancelled a previously booked cargo of Argentine soyoil, the executives said. A subsidiary-owned by COFCO initially tested the official stance by placing an order with Argentina, and later had to switch to Brazil, one executive said.

Meanwhile, prices in Brazil are higher than Argentina, and that is deterring some buyers, they said. Supplies from the US currently face a technical barrier as the government requires some official certifications which the US does not provide. The government may seek to resolve that to encourage US imports, they said.

Importers loaded 5.5 million tonnes of soy in April destined for China, one of the executives said. As the main product from crushing is meal, the record imports of beans may cause meal inventory to surge, potentially hurting crush margins.

Soy futures gained 0.6% to US$9.9250 a bushel in Chicago earlier.