July 15, 2004

China Mission Visits Brazil Co-Ops To Cut Long-Term Soy Deal

A mission of Chinese soy industry executives is visiting cooperatives in the southern Brazilian state of Parana this week to negotiate long-term deals to buy soybeans, a co-op representative said Wednesday.
 
"The Chinese's idea is to close contracts with cooperatives rather than operate through trading companies," said Nelson Costa, superintendent of the Parana Cooperatives Organization, or Ocepar, who is accompanying the talks.
 
The representatives of the central Chinese province of Henan also discussed the construction of warehouses at the port of Paranagua and a crushing unit as part of a project to create a direct export corridor from the interior of Brazil's No. 2 producing state, he said.
 
Cooperative representatives are due to visit China in September, when they expect to further negotiations.
 
Brazil is the world's No.2 soybean producer and China is its main client.
 
Crushers in Henan process three million metric tons of soybeans each year, but the province only produces one million tons of beans, creating ready import demand, said Costa.
 
This is the first delegation to land on Brazilian shores since controversy hit the soy trade in May and June over the rejection of some 359,000 metric tons of Brazilian soybeans by Chinese quarantine authorities because cargoes contained fungicide-treated seeds.
 
He said the Chinese mission considered the new rules governing cargo contamination extremely strict, which were put in place following the Chinese ban. The new regulation bans shipments from leaving port should cargoes contain more than one seed per kilogram, a threshold three times lower than the international standard.
 
Chinese crushers also said it could help Parana cooperatives acquire imported fertilizers at reduced costs.
 
The delegation also met with Parana state Gov. Roberto Requiao. In a press release, he said the Chinese crushers and the state have the common goal to break the monopoly international trading companies have on the world soybean trade.
 
Traders say Chinese crushers have been delaying, and where possible, canceling shipments this year after a sudden dive in prices and a contraction of credit there.
 
According to the release, Parana currently exports 500,000 tons of soybeans to Henan but this figure could rise to two million tons over the coming years.
 
Last year, Brazil exported 6.1 million tons of soybeans to China.