Brazil confirms China is blocking soybeans from five major exporters
This could be spicy.
On Thursday, Brazil's agriculture ministry announced that China has been blocking imports from five major Brazilian soybean exporters in recent days, in response to a scoop from Reuters.
- Cargoes from Terra Roxa Comercio de Cereais, Olam Brasil, and C.Vale Cooperativa Agroindustrial have been suspended since January 8.
- Shipments from the Brazilian subsidiaries of Cargill and ADM have been blocked since January 14.
Why it matters: Brazil is the world's largest exporter of soybeans, and China is the world's biggest importer. In recent years, China has consistently sourced more than 70% of its imports from Brazil.
- These huge traders typically ship well over 30% of Brazil's soybean exports – though Brazil's agriculture ministry insists that "other units of the same companies can continue exporting."
Officially, the suspensions came after China customs (GAC) reportedly detected "non-conformities" including pesticide residues and pests, in routine inspections of cargoes.
But there's reason to suspect it could be more complicated than a simple phytosanitary fix.
- US President Trump has recently threatened to assess progress on the "Phase One" US-China trade deal inked in January 2020 during his last administration, in which China pledged to purchase an additional USD 200 billion in American exports – including soybeans.
- China ultimately bought little more than half of that, and ascribed the shortfall to the onset of the COVID-19 pandemic, which upended global markets.
The upshot: China might be blocking Brazilian beans in order to make way for a splurge on US soy in hopes of appeasing Trump.
The bottom line: If you look hard enough, you can almost always find minor phytosanitary issues with bulk agricultural products, making them an easy target for politicized intervention into trade.