April 6 (Bloomberg) -- Argentina is “optimistic” negotiations will end a blockade by China on soybean oil imports that may cost the South American country as much as $2 billion, an Argentine soy industry official said.

“Two giants are fighting to see how they balance a trade balance, but it’s a normal trade dispute and nothing dramatic,” Miguel Calvo, vice president of the Argentine Soybean Chain Association, said today in a telephone interview from Buenos Aires. “It wouldn’t be convenient to take on negotiations without being optimistic about being successful in the end.”

Chinese importers began curbing exports from Argentina on April 1 after they said the Latin American country had accelerated cases of antidumping measures against Chinese imports. China is the world’s largest importer of soybean oil. Argentina is the biggest producer. The South American country is also the third-largest producer and exporter of soybeans.

Argentina’s Foreign Minister Jorge Taiana met with China’s Ambassador Zeng Gang in Buenos Aires yesterday to discuss the blockade. The Argentine ambassador for agricultural affairs, Carlos Cheppi, is in Beijing negotiating an end to the blockade, the Agricultural Ministry said yesterday in an e-mail.

A slump in Argentine supplies may boost domestic prices and margins of China’s vegetable oil, according to Tommy Xiao, an analyst at Shanghai JC Intelligence Co.

“In effect this reduction of soybean oil imports may cause domestic prices to rise, help crush margins and encourage processors to import more beans” instead of oil, Xiao said in a telephone interview March 31 from Shanghai. It is also a trade retaliation measure, he said.

Brazil Trade Dispute

Argentina in November resolved a trade dispute with Brazil that stemmed from Argentina’s move to place import restrictions on textiles, tires and wood furniture to protect local industries amid the global financial crisis. Brazil, Argentina’s main trade partner, retaliated with similar restrictions.

Argentine soybean oil exports to China for 2010 are estimated to reach about $2 billion, according to the Buenos Aires-based financial consulting group Abeceb. The Argentine government may lose about $600 million from export tax revenues, according to Abeceb.

April 06, 2010, 3:07 PM EDT

By Rodrigo Orihuela

--Editors: Robin Saponar, Jessica Brice

To contact the reporter on this story: Rodrigo Orihuela in Buenos Aires at rorihuela@bloomberg.net

To contact the editor on this story: Dale Crofts in Buenos Aires at dcrofts@bloomberg.net

Source: www.businessweek.com