By Ella Kao and Naveen Tokral
BEIJING/SINGAPORE, March 13 (Reuters) – Tighter phytosanitary checks are hitting Brazilian soybean shipments to China and threatening to cut supplies to the world’s top importer after officials in the South American country stepped up inspections at Beijing’s request.
Brazil’s agriculture ministry has stepped up inspections of soybean shipments to China after Beijing continued repeated findings of pesticide- and fungicide-coated beans, four trade sources said.
“Chinese practices in different regions have seen more problems in Brazilian soybeans, including the presence of live insects, beans coated with seed treatment agents such as pesticides or fungicides, and heat damage,” said an Asian trader at an international company that sells soybeans in China.
Importers must now frequently verify with Brazilian suppliers that shipments are free of phytosanitary problems before shipping, a second Asian trader said, at the risk of being blocked after arriving in China.
Tighter quality checks during Brazil’s peak export season could hurt supplies in China, although the market is well stocked after last year’s record buying.
“If inspections become stricter and clearance times lengthen at both ends, it will slow down arrivals in March-April,” said Chiang Kang Wei, vice president of StoneX in Singapore.
That could provide a window of opportunity for U.S. suppliers to sell more to China, which began buying from the U.S. following a trade deal in late October. Beijing did not buy U.S. soybeans from the fall harvest until late October.
“There is a window in theory, if Brazil’s flow is disturbed, but it will likely be a temporary rather than a permanent change, unless trade diplomacy improves,” Chiang said.
The Latin American head of trading company Cargill told Reuters on Wednesday that it had stopped exporting soybeans from Brazil to China.
China’s General Administration of Customs and the Brazilian Embassy in Beijing did not immediately respond to requests for comment.
Longer waits, higher costs
Long waiting times for ships to be certified in Brazilian ports have increased demurrage costs and added pressure to higher shipping rates after the Iran war.
Freight rates for Panamax vessels from the port of Santos to major northern Chinese ports rose about 24% in March, data from consultancy Mysteel showed.
Offers to sell Brazilian soybeans to China have dried up due to stricter phytosanitary checks and higher freight rates, traders said.
