China and Brazil have resolved a simmering spat over tainted soy, allowing Beijing to resume more than $1 billion in annual oilseed trade with a South American nation keen to sell everything from iron ore to oil.
The two emerging market giants got embroiled in a spat after China began rejecting cargoes of Brazilian soy in April, citing contamination with a fungicide harmful to humans - at a time when bilateral trade hit an all-time high of $8 billion in 2003.
Now China had reached a consensus with major trade partner Brazil, the quarantine bureau said on Tuesday, meaning 23 banned soy suppliers, including Cargill, Archer Daniels Midland Co and Louis Dreyfus, could resume shipping.
But traders still worry. At least five shipments of the yellow oilseed are languishing at ports, industry sources say.
"My question now is, what are they going to do to those rejected cargoes still stuck at the ports?" said a trader. "It's nevertheless a good start, with both countries in agreement." Brazil's Agriculture Ministry earlier announced China had agreed to lift its ban on soy exports from the South American country, following a day of frantic talks in Beijing.
China is Brazil's top soy customer, and Brazil's third-largest trading partner in 2003, behind the United States and Argentina.
"We've reached a consensus to create conducive conditions to allow relevant firms to resume Brazilian soy exports to China," China's quarantine bureau said in a statement. That weighed on China's Dalian soybean contracts.
A resumption of soybean trade with Brazil would mean increased supply of the yellow oilseed - usually crushed to make meal for animals and edible oil - in the country, traders said.
The most active Dalian contract, September , inched up to close at 3,409 yuan a tonne, lagging rises on the Chicago Board of Trade, where the key July futures climbed 16-1/2 cents, or 1.9 percent, to $8.88-1/2 per bushel on Monday.
Global markets have accused China of using strict sanitary regulations to default on deals of Brazilian soybeans sealed at sky-high prices, to help its loss-making crushing industry.
Even picky Japan had never complained of beans tainted with carboxin - the fungicide at the centre of the dispute.
But the quarantine bureau said on Tuesday the soybean suspension was technical, not political.