Tighter phytosanitary checks are hitting Brazilian soybean shipments to China, threatening to squeeze supplies to the world's top importer after authorities in the South American country stepped up inspections at Beijing's request.
Brazil's Agriculture Ministry increased inspections on soybean shipments to China following Beijing's repeated findings of pesticide- and fungicide-coated beans, four trade sources said.
"Chinese customs in various regions have observed increased issues in Brazilian soybeans, including the presence of live insects, beans coated with seed treatment agents such as pesticides or fungicides, and heat damage," said an Asian trader at an international company which sells beans to China.
Importers now must repeatedly verify with Brazilian suppliers that shipments are free of phytosanitary problems before departure, on risk of being blocked once they reach China, a second Asian trader said.
Tighter quality checks during Brazil's peak export season could hit supplies in China, though the market is well-stocked following last year's record purchases.
"If inspections are tightened and clearance times lengthen on both ends, it could slow the pace of arrivals in March-April," said Cheang Kang Wei, vice president at StoneX in Singapore.
That could provide a window of opportunity for US suppliers to sell more to China, which resumed purchases from the United States in late October following a trade deal. Beijing had not bought any US soybeans from the autumn harvest until late October.
"There is a window, in theory, if Brazilian flows are disrupted, but it would likely be timing-related rather than a lasting shift, unless trade diplomacy improves," said Cheang.
Trading firm Cargill's Latin America head told Reuters on Wednesday it had paused soybean exports from Brazil to China.
China's General Administration of Customs and Brazil's embassy in Beijing did not immediately respond to requests for comment.
Longer waiting time for ships for certification at Brazilian ports have raised demurrage costs, adding to pressure from high freight rates following the Iran war.
The freight rate for Panamax vessels from the Santos Port to major northern Chinese ports rose around 24 per cent in March, consultancy Mysteel data showed.
Offers to sell Brazilian soybeans to China have dried up due to tighter phytosanitary checks and higher freight rates, traders said. Brazil soybeans for April shipment, including cost and freight, were quoted around $1.22 a bushel over the May contract this week, above the $1.12 offered on February 27.
China's soybean imports fell 7.8 per cent in the first two months of the year, due in part to slower Brazilian harvests and extended customs clearance. Soymeal prices on China's Dalian exchange on Friday rose to the highest since July 2024, though traders expect the impact to be temporary, with conditions likely to improve.
"Brazil is unlikely to let the export flow to China hit a snag at this peak point in the shipping season," StoneX chief commodities economist Arlan Suderman said in a client note.
(Reporting by Ella Cao in Beijing and Naveen Thukral in Singapore; Editing by Pooja Desai)
