* Brazil denies reports of eased soybean inspection rules

* Officials to propose sanitary protocol in China next

week

* Traders complain tighter checks slow shipments, raise

costs during peak season

By Gabriel Araujo

SAO PAULO, March 17 (Reuters) - Brazilian Agriculture

Minister Carlos Favaro said on Tuesday that the government will

negotiate soybean inspection and safety requirements for

Brazilian shipments of the crop to China, following complaints

from Beijing.

Favaro said Brazil had not eased inspections in recent days,

denying reports by local media that the government had made

changes to make exports more flexible.

The minister confirmed that Brazil had received complaints from

Chinese buyers and authorities after some cargoes showed the

presence of weed seeds, and that it intensified inspections when

the complaints persisted.

Media outlet Globo Rural reported on Monday that the

Agriculture Ministry would hand over some soybean-inspection

duties to shipping-supervision companies, after complaints from

trading firms about the tougher inspection rules which they said

made it harder to obtain export certificates.

"No rule was changed," Favaro said. "We have the legal

obligation to inspect."

He added that vessels with pending inspections would receive

certificates only if their cargoes met the standards required by

China, the world's largest soybean importer. "If there had been

any easing, the ships would be sailing," he said.

OFFICIALS HEAD TO CHINA FOR TALKS

Favaro said Brazil would send two ministry officials - Luis

Rua, the agriculture ministry's secretary for trade and

international relations, and Carlos Goulart, the ministry's

agricultural protection secretary - to China next week to

propose a sanitary protocol.

Brazil wants to negotiate terms that satisfy China's

inspection demands, preserve the operating capacity of Brazil's

industry and minimize risks, Favaro said.

He noted the dispute did not amount to an embargo by China.

"If China had intended to suspend purchases of Brazilian

soybeans, it would have suspended them. That is not the issue."

SHIPMENTS SLOW DURING PEAK EXPORT SEASON

Reuters reported last week, citing trade sources, that Brazil's

Agriculture Ministry increased inspections on soybean shipments

to China following Beijing's repeated findings of pesticide- and

fungicide-coated beans.

Traders said the tighter checks were slowing shipments

during Brazil's peak export season, raising costs and

threatening to disrupt supplies to China. Delays in receiving

export certificates have kept ships waiting at port longer than

scheduled, resulting in penalty fees, they said.

Grain trader Cargill last week suspended Brazilian soybean

shipments to China on the changes.

Still, Brazil's soybean shipping schedule remains little

changed from a week ago, a report from grain exporters' group

Anec showed on Tuesday. Exports for the month are estimated to

come in at 16.32 million metric tons, slightly below last week's

projection of 16.47 million metric tons.