CHICAGO, (Reuters) – China, the world’s top soybean buyer, will reduce the amount of foreign material allowed in shipments of U.S. soybeans as of Jan. 1, the U.S. Department of Agriculture said on Wednesday, a move that may curb imports.
U.S. 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 USDA’s Animal and Plant Health Inspection Service.
Quality specifications for No. 2 yellow soybeans – the variety most common in U.S. export contracts – allow for up to 2 percent foreign material.
The more stringent standards will be another headache for U.S. 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 U.S. cargos, Wepsala said.
U.S. 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 United States, Brazil and Argentina. Exports of U.S. soybeans to China in 2016 were valued at more than $14 billion, according to USDA.
Ensuring soybeans contained only 1 percent foreign material could add 15 cents per bushel in costs for U.S. exporters, and processors in China will likely buy from South America to avoid any potential delays in unloading, said ED&F Man Capital analyst Charlie Sernatinger.
“There’s no way they’re buying U.S. 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 U.S. Pacific Northwest generally had less than 1 percent foreign material while shipments from the Gulf Coast had up to 2 percent, said a U.S. export trader for a major grain handler who was not authorized to speak to the media.
“Going forward, if this is what China wants, we will have to adjust,” he said.
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 industry group.
“Argentine soy … has had no complaints from China about this in particular,” Alcaraz said of foreign material.