China, the world's top soybean buyer, will reduce the amount of foreign material allowed in shipments of US soybeans as of January 1, the US Department of Agriculture said on Wednesday (US time), a move that may curb imports.
US soybean shipments arriving at Chinese ports containing up to 1 percent of foreign material would be expedited while shipments with more than 1 percent could be held back for testing, according to Will Wepsala, a spokesman at the USDA's Animal and Plant Health Inspection Service.
Quality specifications for No.2 yellow soybeans - the variety most common in US export contracts - allow for up to 2 percent of foreign material.
The more stringent standards will be another headache for US grain handlers already facing dwindling profit margins due to record global soybean supplies.
China requested the change in specifications due mostly to concerns over weed seeds in US cargos, Wepsala said.
US soybean farmers in recent years have been battling herbicide-resistant weeds, the remnants of which show up in harvested beans.
China accounts for roughly two-thirds of global soy imports, buying primarily from the US, Brazil and Argentina. Exports of US soybeans to China in 2016 were valued at more than $14 billion, according to the USDA.
Tang Ke, spokesperson at China's Ministry of Agriculture, said during a press conference on October 17 that the rapid increase in imported soybeans, particularly since January, has to some extent squeezed the market space for domestic soybeans.
Ensuring soybeans contain only 1 percent foreign material could add 15 cents per bushel in costs for US exporters, and processors in China will likely buy from South America to avoid any potential delays, said ED&F Man Capital analyst Charlie Sernatinger.
"There's no way they're buying US beans," Sernatinger said of his Chinese clients.
Chicago Board of Trade January soybean futures fell 2 cents to $9.54 per bushel, a three-month low, declining in part because of the China trade requirements.
Shipments of soybeans to China from the US Pacific Northwest generally had less than 1 percent foreign material while shipments from the Gulf Coast had up to 2 percent, according to a US export trader for a major grain handler who declined to be named.
In Argentina, shipments of soybeans to China can contain up to 2 percent foreign material, said Andres Alcaraz, spokesman for Argentina's Ciara-Cec grains exporters group.
