China drops ban on rapeseed meal from India

By Hallie Gu and Rajendra Jadhav

BEIJING/MUMBAI (Reuters) - China has dropped a years-long ban on rapeseed meal imports from India as the government seeks to diversify sources of protein used in animal feed, the customs administration said on Monday.

Rapeseed meal shipments from India can resume from Monday if they meet certain inspection and quarantine requirements, the General Administration of Customs said on its website.

The move is China's latest effort to reduce its reliance on U.S. soybeans, as Beijing and Washington remain locked in an outright trade war.

China buys 60 percent of the soybeans traded worldwide, processing them into soymeal to feed its vast pig herds. Soybeans are the top U.S. agricultural export to China by value.

China was the top buyer of Indian rapeseed meal before the ban was imposed in 2011 over quality concerns. As Sino-U.S. trade tensions escalated, India stepped up its lobbying for the restart of a trade worth $161 million in 2011.

Indian rapeseed meal exported to China must be from processing plants inspected and approved by the Export Inspection Council of India, and registered with China's General Administration of Customs, the Chinese body said on its website.

"This is a very good development that we were expecting. But still exporters need to register with Chinese authorities and it is a lengthy process," said B. V. Mehta, executive director of the Solvent Extractors’ Association of India, an industry body.

India has an ample surplus to export 500,000 tonnes of rapeseed meal to China every year, Mehta said.

Rapeseed futures in India jumped more than 1 percent on Monday to 4,222 rupees ($57.48) per 100 kg.

Farmers in India have started planting rapeseed, the country's main winter-sown oilseed crop, a Mumbai-based trader of edible oils said.

"Farmers will expand the area under rapeseed if prices rise in the next few weeks due to Chinese demand," the trader said.

China imposed tariffs of 25 percent on a list of American products including soybeans on July 6, in response to U.S. duties on Chinese goods worth a similar amount.

The retaliative measures will likely tighten supplies of the oilseed in the fourth quarter, when U.S. beans usually dominate the market, and push up prices of soymeal.

Beijing is mulling capping protein levels in pig and poultry feed, and seeking ways to import more alternative meals such as rapeseed meal and sunflower meal.

In July, Beijing removed tariffs on soybeans, soymeal and rapeseed from five Asian countries including India.

(Reporting by Hallie Gu and Rajendra Jadhav; editing by Darren Schuettler and Dale Hudson)