China Says Imported U.S. Soybeans Have Problems

China, the world's biggest buyer of soybeans, said it found ``substantial'' quality-related problems with imports of the U.S. oilseed and urged the U.S. to investigate and improve its export procedures.
Soybeans shipped from the U.S. often contained low-grade seeds, as well as weeds which may threaten the local environment, the General Administration of Quality Supervision, Inspection, and Quarantine said in a statement on its Web site today. Some shipments had fungicide residue, it said.

China's comments follow U.S. reports of unsafe Chinese products, including contaminated fish and pesticide-laced vegetables and may intensify trade friction between the two countries. U.S. lawmakers are trying to pass a bill that may cut access to the U.S. market for Chinese poultry, the official China Daily reported today.

``It's a knee-jerk reaction'' as China retaliates against the U.S. for accusing its products of being unsafe, said Phil Laney, country director for the U.S. Soybean Export Council, in Beijing. The issues raised by China are considered minor and acceptable in the trade, he said.

China's soybean output may fall to the lowest in 15 years in 2007 because of reduced planting and drought. This may spur a 10 percent jump in imports to a record 31.4 million tons in the year from October, according to independent commodity research firm Shanghai JC Intelligence Co.

Process `Holes'

The world's fastest-growing major economy needs more of the commodity to crush into livestock feed, as rising incomes boost meat consumption. Almost half the country's imports of the oilseed so far this year come from the U.S.

The problems with U.S. soybeans indicate there are ``holes'' in the U.S. production, transportation, export inspection and quarantine processes, the statement said, adding China will step up monitoring of imported soybeans and toughen its stance in negotiations. It did not name specific companies.

``We haven't had issues with our shipments from the U.S.,'' said Guo Yun, a Zhangjiagang-based buyer at East Ocean Oils & Grains Industries (Zhangjiagang) Co. ``This does not affect our purchases and I don't see it affecting the trade.''

Some of the weeds listed by China are common in the U.S., and given the large size of the trade, problems are bound to happen, Laney said. Soybean quality is determined on the basis of the average of the entire shipment, so it's likely that some batches may be of lower grades than others, he said.

Shipments

The statement by China may not significantly affect U.S. soybean imports, Laney said. In the past, the practice was to destroy the problematic shipments on arrival under the supervision of the inspectors, he said.

China's soybean imports, mostly from the U.S. and Brazil, have almost doubled since 2003-04. Imports from January to July rose 2.6 percent to 16.9 million tons, with 7.8 million tons coming from the U.S., according to customs data. The U.S. is the world's largest producer.