August 31, 2007

 

Tightened soy inspections in China leading to fears of huge losses

 

 

Beijing has tightened checks on soy shipments from the US and Argentina, prompting fears that the government could cause a repeat of the million-dollar losses to importers experienced in 2004.

 

Traders said quarantine authorities were inspecting soy more thoroughly than before, but have not turned away any shipment so far.

 

China has criticised the US for exporting substandard soy containing harmful dirt and weeds and falling short on protein and oil content. It also alleged that a February grain shipment contained harmful levels of pesticides.

 

Last week, the quarantine authorities said it would strengthen its supervision over soy imports to ensure quality and safety.

 

Delays have caused some importers to divert shipments to warehouses and traders report it now takes a longer time for shipments to be inspected and discharged.

 

Whether the situation improves may have to depend on political developments. China's image has taken a pounding in recent months as the US government and media uncovered a series of problems with products made in China.

 

Brazilian shipments did not face difficulties but few were arriving at present.

 

In 2004, Chinese authorities caused huge losses to the soy industry when a number of Brazilian soy shipments were rejected for quality problems.

 

The potential losses have caused Chinese buyers to hold back on soy purchases despite soy demand seeing a revival in the country.

 

Higher freight costs also play a part in the lower level of purchases. Moreover, traders would have to pay even more freight charges if shipments were turned back.

 

Despite the political gesturing, traders think there is little danger of soy shipments being rejected as China needs imports.