Half of U.S. soybeans exported to China this year would not meet Chinese rules for routine delivery in 2018, according to shipping data reviewed by Reuters, signaling new hurdles in the $14-billion-a-year business.
More stringent quality rules, which took effect on Jan. 1, could require additional processing of the U.S. oilseeds at Chinese ports to remove impurities. This could raise costs and reduce sales to the world’s largest soybean importer, according to U.S. farmers and traders.
Top agricultural traders, including Archer Daniels Midland Co, Bunge Ltd and Louis Dreyfus Corp, already have policies to encourage farmers to deliver soybeans with less than 1 percent of foreign matter.
But the penalty for falling short is relatively minor. At elevators operated by each of the companies, they deduct the weight of foreign material in excess of 1 percent from weighings. The USDA plans to advise U.S. soybean farmers how to adjust 2018 production and harvesting techniques to reduce seed contamination. Some weeds have thrived in soybean fields after developing resistance to the widely used Roundup herbicide.
ADM said it supported efforts by the North American Export Grain Association, a trade group that worked with the USDA on the agreement, “to achieve an outcome that is beneficial for American agriculture.” The association, Bunge and Louis Dreyfus did not immediately respond to requests for comment. Cargill Inc., another large soybean handler, said it was evaluating the new policy and the potential impact on its business.
