The Dalian Commodity Exchange has announced changes for the validity period of soybean oil warehouse receipts.
The change, which will go into effect starting in August 2023, will shorten the validity of soy oil warehouse receipts to 4 months, down from the current period of 12 months.
The change is a result of China’s increased reliance on Brazilian soybeans as opposed to US soybeans.
The exchange said that Brazilian soybeans have a higher oil content and are also transported to China during hotter summer months which affects the oil quality. These factors, combined with long storage times for the oil in China, led to quality problems.
Shipping time from Brazil to China are also longer than shipping times from the US to China.
While export volumes from the US and Brazil were generally similar, the US-China trade war led to a sharp shift in volumes with 2018 seeing China import nearly 4 times more Brazilian soybean than US soybeans.
The changes are expected to lead to faster turnover of warehouse stocks which should reduce quality issues.