November 9, 2017 / 11:01 AM / a month ago

Tougher approval process for soybean imports could hit Chinese demand - sources

(Reuters) - China is taking longer to issue safety certificates for cargoes of genetically modified (GMO) soybeans, in a move that could dent demand for purchases in coming months, four trade sources said.

China, which buys 60 percent of global soybean exports, mainly buys GMO soy from Brazil and the United States, largely to feed the world’s biggest herd of pigs.

But at least a couple of cargoes carrying about 60,000 tonnes each have not received certificates and more could be involved going forward, the sources said.

“There is a lot of tension among crushers,” said one Singapore-based senior executive at an international trading company.

“There are a couple cargoes that have arrived but have no certificates. They are facing higher demurrage costs of $15,000 a day. There might more shipments getting impacted in the future,” he said, referring to fees that ship charters must pay to owners when cargoes are not unloaded at the agreed time.

China has stepped up checks on soybeans imports over the last year, ordering ports to crack down on the leaking of the GMO beans into the food sector.

It is not clear if delays in getting safety certificates for imports is related to these tighter controls. China’s Ministry of Agriculture, responsible for issuing the certificates, did not respond to queries sent by fax.

BUYERS DELAY SHIPMENTS

The Singapore source said delays started hitting soybean imports in October. However, an oilseed trader in China said the certificates have become significantly harder to get since April. While the situation eased over the summer, it has recently resurfaced again.

“They seemed to have lowered the pass rate for soybean cargoes,” said a second China-based oilseed trader. “There’s been no explanation, we are all curious about it.”

While some crushers have started applying for certificates even before booking a cargo, others are trying buy more time by delaying shipments.

Importers are trying to avoid loading soybeans from U.S. Pacific Northwest (PNW) terminals and instead prefer ports on the Gulf of Mexico.

“It takes 17 days to bring soybeans from PNW to China and around 55 days from the Gulf, so buyers are saying it’s better to book from the Gulf to avoid demurrage,” said the Singapore-based senior executive.

The tougher application process may also deter some buyers from making purchases, warned the second China-based trader.

“Right now, with all crushers buying hand-to-mouth, if you want to open a November or December shipment and do not have a certificate on hand, you will have to think,” he said.

Growing concerns over the issue are likely to be a hot topic at next week’s annual oilseeds conference in Guangzhou.

Crush margins in China’s Shandong province, the hub of soybean processing, have been hovering mainly in positive territory since late August, spurring strong demand for imports.

The Agriculture Ministry on Thursday increased its forecast for soybean imports in 2017/18 to 95.97 million tonnes from a previous forecast of 94.5 million tonnes, boosted by strong crushing demand.

Reporting by Naveen Thukral and Dominique Patton; Editing by Christian Schmollinger

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