U.S. Soybean Exports to China Would Fall

China is by far the biggest destination for U.S. soybean exports, with sales of $14.2 billion of the oilseed in 2016, more than one-third of the value of the nation’s crop. 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.

More stringent quality rules, which take 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.

Delaware farmer and former chairman of the American Soybean Association Richard Wilkins said:

It’s going to raise the costs of sending the soybeans to China. Growers often receive a higher price for selling soybeans with 1 percent or less foreign material, known as No. 1 grade, because importers pay more for better quality. The change would deliver higher-grade soybeans to Chinese buyers without requiring a premium price. They basically want to pay us for No. 2 grade but they want it to be No. 1 grade.

China will routinely accept U.S. soybean shipments with 1 percent or less foreign material, according to the USDA. Existing specifications for No. 2 soybeans, the type most common in U.S. export contracts, have allowed for up to 2 percent of dirt or weed seeds. The new agreement by the USDA to label cargoes with more than 1 percent foreign material came after China raised concerns about weed seeds in September.

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