BRASÍLIA: China, the world’s top soya buyer, discharged one of three stalled Brazilian bean cargoes, but worries persist that authorities will still halt virtually all soya imports from the South American country. All eyes are now on two other cargoes from Brazil that Chinese quarantine authorities have blocked at mainland ports because of suspicion that they were contaminated with the harmful fungicide carboxin, traders said.
Trade sources told Reuters late on Friday that officials had let one cargo through at its northern port of Qinhuangdao – though it would remain sealed in a silo for further checks. The fate of two other shipments, one at Longkou and one at Xiamen, remained unknown. Fears have arisen that a spate of recent cargo cancellations by Chinese buyers citing contamination portended a wider ban on virtually all bean imports from Brazil, the world’s second largest producer of soya, after the United States. In the latest high-profile case, China stopped three shipments at its ports and put seven major suppliers on a blacklist, banning them from shipping Brazilian beans. If quality problems with the three latest shipments are confirmed, the bureau would be likely to add two more major suppliers to the list, traders said. The blacklist now includes global traders such as Cargill’s and Archer Daniels Midland Co’s Brazil units, and Louis Dreyfus.
China’s quarantine bureau had so far rejected three cargoes they said were contaminated with carboxin – a fungicide only allowed on beans meant as seeds for growing, not for food. If China adds it to the blacklist, that would mean almost all of the 3.0-3.5 million tonnes of Brazilian soya, worth $1.2-1.4 billion, booked for shipment to China between May and July would be stranded, traders said, with no suppliers left to do the business. “No country has ever made a decision to black out all the food supply chain before,” said a senior trader at an international house. “It may help them (crushers) today. But it would damage them in future. Who would sell beans to them?”
In Dalian, some soyabeans and soyameal contracts fell by their daily limits in afternoon trade, with the November soya contract down 88 yuan at 2,877 yuan ($347.6) and the November soyameal contract down 78 yuan at 2,537 yuan ($306.4). The most active September soyabean contract lost 48 yuan to 3,321 yuan. September meal shed 54 yuan to 2,709 yuan. “Chicago falls last night dampened market sentiment,” said a trader with a global trading house in Beijing. Soybean futures at the Chicago Board of Trade tumbled on Thursday due to bearish government monthly crop data released before the market opened, traders said.
CBOT soyabeans closed five to 17-3/4 cents per bushel weaker, with the new-crop November contract down 15-1/2 cents at $6.63-1/2. If China widens the ban, most cargoes now sailing towards China would have to be diverted to other destinations. Others could be cancelled, especially when many crushers already have problems paying for high-priced soya cargoes, traders said. Even if more suppliers of Brazilian soyabeans are not barred from the trade, hardly anyone would dare take the risk with China’s zero tolerance for carboxin.
The Brazilian government says it cannot guarantee that all cargoes were totally free of the chemical. “A lot will be cancelled at the loading port and will go back to Brazil,” said another trader. “(With) June and July put together, around three million tonnes will be cancelled.” China’s soya crisis, triggered by months of negative crushing margins and Beijing’s credit tightening, has helped Chicago soya futures retreat from well above $10 a bushel in late March, highs not seen in more than 15 years.
CBOT’s July contract had shed another 5-1/4 cents to $8.41-3/4 a bushel by 0800 GMT in Asian trade, while the new crop November stood at $6.54-3/4. But traders said in the short run, Chinese crushers might benefit from a suspension as soya arrivals would then drop in coming months, pushing soyameal prices higher and hence restoring crushing margins. Soymeal is the main product of crushing. Crushers were already defaulting on many contracts due to financial problems, industry sources say. The official Xinhua news agency said on Friday Chinese soya imports during the first five months dropped 2.4 percent to 7.48 million tonnes. “It’s good news for crushers,” said a crusher official in Dalian, who declined to be identified.
