May 25, 2004

 

 

New China Soybean Import Ban Concerns Brazil Industry

 

Concerns about the flow of Brazilian soybeans to China heightened Monday after Chinese authorities banned local soybean shipments from two more major exporters, taking the number of embargoed companies to four, Brazilian traders said Monday.

 

"We could see a lot of stranded ships, and this only serves to heighten the uncertainty over sales to China, stymieing the market," said one Sao Paulo-based trader.

 

China is the principal destination for Brazilian soybeans, taking 6.1 million tons of local produce in 2003. According to one trade source, Brazil has around 3.5 million tons of soybeans committed for delivery in China over the next few months.

 

Quarantine authorities announced that Louis Dreyfus Asia Pte Ltd. and ADM do Brasil Ltda would be temporarily banned from selling any Brazilian soybeans to China due to contamination of lots.

 

The companies will be added to a blacklist of firms that includes Noble Grain Pte Limited, Cargill Agricola S/A, Irmaos Trevisan S/A-Ind Com, E Agricultura, and Bianchini S/A Industria. All these firms were banned after a shipment of 58,000 tons was found to be tainted by fungicide-treated seeds.

 

"The only major international firm left out is Bunge. This is a very effective way of stemming the flow of shipments," said one broker, adding that the ploy may be part of a tendency to favor deals direct with local cooperatives.

 

The Brazilian government had not been officially informed that another contaminated shipment had been uncovered or of the ban and would not comment until the situation was clarified, said Gilson Consenza, international secretary at the Agriculture Ministry's animal and vegetable health department.

 

ADM do Brasil was also trying to obtain information about the ban, said a trader for the multinational in Sao Paulo.

 

According to a statement on the Chinese State Administration of Quality Supervision Web site, Louis Dreyfus exported the tainted cargo, which arrived in Guangdong province, while the suppliers of the cargo were ADM do Brasil Ltda, Cargill Agricola S/A.

 

The extension of the ban came as Agriculture Minister Roberto Rodrigues met with Chinese officials in Beijing Monday to discuss the contamination issue. Before the meeting, he said he would promise to increase inspection of shipments and avoid further incidents.

 

The government was still hoping the delegation, which is led by President Luiz Inacio Lula da Silva, will return with an agreement that will allow these companies to restart shipment.

 

Brazilian authorities had identified four shipments of potentially contaminated soybeans, one of which had reached China, and one which was on the high seas but without a certificate to unload there.

 

All the shipments were loaded, or being loaded, at the southern port of Rio Grande.

 

The high instance of seeds in soybean lots there this season was due to uncertainty over the use of genetically modified organisms this season, said traders.

 

Right up to planting time, farmers were unsure whether they would be legally allowed to plant GMOs, a long-standing illicit practice in the southernmost state of Rio Grande do Sul. Fearing strict enforcement of a GMO ban this year, farmers also bought traditional seed. However, when the use of GMOs was cleared in September, farmers opted not to plant the non-GMO plants.

 

"Apparently some farmers chose to offload the unwanted seeds in lots for export," said David Brew of the Porto Alegre-based Brasoja brokerage.

 

Brazil is the world's No. 2 producer and exporter of soybeans after the United States.