Reuters
UDATE - Brazil aims to make China March soybean shipments
Monday January 27, 4:23 pm ET
By Peter Blackburn

(Adds official statement, details)

RIO DE JANEIRO, Brazil, Jan 27 (Reuters) - Brazil on Monday welcomed China's long-awaited green light for imports of its soybeans, still aiming to make shipments for March arrival.

Brazilian shipments to China have been effectively suspended since late last year when Beijing asked exporting countries to certify that their supplies were safe even if they contained genetically modified material.

This posed problems for Brazil, where commercial production of genetically modified crops is banned, but some 30 percent of its soy area is unofficially estimated to be GM.

"We've received written confirmation from the Chinese. Soybeans can be loaded immediately," Odilson Ribeiro, director of crop safety, told Reuters.

Ribeiro said the temporary agreement, which extends until Sept. 20, made it possible for Brazilian shipments to reach China before end-March.

If Brazil has not decided by Sept. 20 whether or not to authorize GM soy, then the agriculture ministry said in a statement it will issue a certificate for conventional soy.

If Brazil approves the production of GM soy, then it will accept Chinese import rules, including inspection by the Qurantine Ministry of each soy shipment.

The agriculture ministry added that Brazilian shipments could contain GM Roundup Ready soy produced by Monsanto Co. (NYSE:MON - News).

"This contamination could occur because Brazil borders countries that produce GM soy," Ribeiro said in the statement.

Traders said they did not expect China to start issuing certificates until after the Chinese Lunar New Year holiday ends on Feb. 7. It was also uncertain China would do so immediately or later in the month.

China needs Brazilian soybeans to avoid a possible shortage following the end of the soybean season in the United States, another major supplier.

BRAZIL SOY PRICES SEEN FIRMER

Brazilian traders said Chinese demand for Brazilian soybeans would strengthen domestic prices.

"I expect that local market dealings will become livelier, although the news is negative for international prices," said a broker in Parana, Brazil's No.2 soy producing state.

In Lucas do Rio Verde in Mato Grosso state, where harvesting has already started, Lucas brokerage on Monday quoted a 60-kg bag at 36.50 to 37 reais ($10.1/10.2) for prompt delivery.

In Chicago, CBOT benchmark March (SBH3) futures rose sharply in early trade on Monday on fears hot dry weather was stressing the Argentine crop, but pared gains later and at 2040 GMT were up 3 cents at 5.72 cents a bushel.

Brazilian soybean sales to China, as well as to other destinations, have been slow since December, partly due to uncertainty about Chinese arrangements and lack of producer offers.

"Prices didn't attract producer selling. We expect sales to speed up as harvest approaches and China has now defined its position," said another trader, adding one deal for end-March shipment was concluded Friday.

Brazilian shipments to China are expected to speed up in March as the harvest gathers pace. February sales are mainly destined for local crushers who are willing to pay higher prices to restart their plants ahead of the harvest.

Traders estimate China has bought more than 6 million tonnes of soy, mostly for April/July shipment, from South America where record crops are expected.

China, the world's No.1 soy importer, is expected to purchase a record 14.5 million tonnes in 2002/03.

Brazil, China's main soybean supplier, expects to ship some 5 million tonnes to China this year after shipping more than 4 million tonnes last year.