09/06/2010 (Bloomberg) - China, the world’s biggest user of cooking oils, is buying U.S. soybean oil after imports from Argentina were halted because of a trade dispute, two traders with direct knowledge of the transactions said.

Importers in China may have bought as much as 100,000 metric tons, anticipating the U.S. will start certifying shipments to comply with Chinese regulations, said the traders, declining to be identified because the information isn’t public. The U.S. government today confirmed sales of 40,000 tons of soybean oil to the Asian nation for delivery before Sept. 30

China halted shipments from Argentina, the world’s biggest supplier, in April as part of a disagreement over antidumping measures. The government last month told companies including Cofco Ltd., the state-owned grain trader, that it will maintain the embargo and buyers should seek Brazilian and U.S. supplies.

“This is good news for soybean oil traded in Chicago,” said Amol Tilak, analyst at Kotak Commodity Services Ltd. in Mumbai. “Prices are bound to move up and you may see some positive activity in palm oil. The U.S. and Brazil will be nations in a position to supply the grade and quality of bean oil China is looking for.”

The U.S. Department of Agriculture has said it may take steps to certify the safety of domestic oil in a bid to spur sales to China. The agency is reviewing whether to issue permits that would certify U.S. oil meets Chinese standards, said Alyn Kiel, a USDA spokeswoman. No decision has been made, she said by telephone from Washington on June 7.

Brazil, Argentina
Almost all China’s soybean oil has come from Argentina and Brazil, customs data showed. Imports of crude bean oil from the U.S. have been mostly barred because of a procedural dispute, a representative from the U.S. agriculture industry, who declined to be identified, said last month.

China requires the U.S. government to provide exports with a phytosanitary certificate, which attests the product is clear of pests and other diseases, the representative said. The U.S. resisted because it views soybean oil to be a processed product and sees the condition as an administrative barrier, he said.

Argentina and China are on “good course” to resolve a two-month long dispute, the South American nation’s agricultural minister said June 7, without providing a timeframe.

The two countries have “a long history of trade” and can be expected to reach an agreement, Agricultural Minister Julian Dominguez told reporters in Buenos Aires. The government is working to adjust production to meet Chinese standards, he said.

Biggest Supplier
China has ruled out resuming imports, and wants Argentina to scrap anti-dumping duties on items such as shoes, textiles and steel products. The central government took full control of Argentine soybean oil imports from the provinces from April 1.

The Asian country imported 784,157 metric tons of soybean oil in the six months beginning Oct. 1, according to customs data kept by Bloomberg. Argentina supplied 80 percent, while Brazilian exports represented 19.2 percent, according to calculations by Bloomberg.

Imports totaled 1 million tons for the six-month period a year earlier and the Latin American countries contributed similar amounts, according to Bloomberg calculations.

Soybean oil for July delivery on the Chicago Board of Trade gained 0.2 percent to 36.75 cents a pound at 8 p.m. Beijing time.