AGL 37.01 Decreased By ▼ -0.99 (-2.61%)
AIRLINK 215.30 Increased By ▲ 1.39 (0.65%)
BOP 9.50 Increased By ▲ 0.08 (0.85%)
CNERGY 6.28 Decreased By ▼ -0.01 (-0.16%)
DCL 8.80 Increased By ▲ 0.03 (0.34%)
DFML 43.56 Increased By ▲ 1.35 (3.2%)
DGKC 93.35 Decreased By ▼ -0.77 (-0.82%)
FCCL 34.97 Decreased By ▼ -0.22 (-0.63%)
FFBL 88.94 No Change ▼ 0.00 (0%)
FFL 17.02 Increased By ▲ 0.63 (3.84%)
HUBC 126.89 Decreased By ▼ -0.01 (-0.01%)
HUMNL 13.45 Increased By ▲ 0.08 (0.6%)
KEL 5.28 Decreased By ▼ -0.03 (-0.56%)
KOSM 6.99 Increased By ▲ 0.05 (0.72%)
MLCF 42.92 Decreased By ▼ -0.06 (-0.14%)
NBP 58.90 Increased By ▲ 0.05 (0.08%)
OGDC 217.50 Decreased By ▼ -1.92 (-0.88%)
PAEL 39.05 Decreased By ▼ -0.11 (-0.28%)
PIBTL 8.12 Decreased By ▼ -0.06 (-0.73%)
PPL 190.50 Decreased By ▼ -1.16 (-0.61%)
PRL 38.30 Increased By ▲ 0.38 (1%)
PTC 26.40 Increased By ▲ 0.06 (0.23%)
SEARL 103.25 Decreased By ▼ -0.75 (-0.72%)
TELE 8.40 Increased By ▲ 0.01 (0.12%)
TOMCL 34.50 Decreased By ▼ -0.25 (-0.72%)
TPLP 12.80 Decreased By ▼ -0.08 (-0.62%)
TREET 25.74 Increased By ▲ 0.40 (1.58%)
TRG 72.90 Increased By ▲ 2.45 (3.48%)
UNITY 33.10 Decreased By ▼ -0.29 (-0.87%)
WTL 1.74 Increased By ▲ 0.02 (1.16%)
BR100 11,912 Increased By 18.2 (0.15%)
BR30 36,828 Decreased By -27.2 (-0.07%)
KSE100 110,538 Increased By 114.2 (0.1%)
KSE30 34,777 Decreased By -0.6 (-0%)

China's soyabean processors are snapping up record volumes of Brazilian cargoes for shipment in the fourth quarter, curbing purchases of US crops in North America's peak marketing season as the trade war between Washington and Beijing intensifies. That shift away from US beans by China, which takes more than 60 percent of the commodity traded worldwide, will pile further pressure on benchmark Chicago Board of Trade prices after they plumbed 10-year lows last week.
China in July imposed a retaliatory 25-percent import duty on US soyabeans as part of the tit-for-tat trade dispute between the world's top two economies, conflict that gathered steam this week with the introduction of fresh tariffs on other products. "Chinese buyers are snatching soyabeans from Brazil's domestic oilseed market," said a Singapore-based trader at an international trading company that runs oilseed processing plants in China.
"They are willing to pay higher prices for Brazilian beans than what domestic crushers are paying," he added, declining to be identified as he was not authorised to speak with media. Brazil's soyabean export season typically ends in August-September after which cargoes from the United States take over the market until March. The South American nation is the world's top exporter, while the United States is No. 2.
But Chinese importers have this year booked a record 12 to 14 million tonnes of Brazilian beans for October-November arrival, according to the trader and an analyst in China. That comes as increases in storage capacity and improved logistics have allowed Brazil to extend its selling season.
In 2017, Brazil shipped just under 9 million tonnes to China in the final quarter, which was the previous record and well above the average of 3.7 million tonnes the country had shipped during that quarter from 2010 through 2015.
Soyabeans are crushed to make cooking oil and soyameal, a protein-rich animal feed ingredient. The landed cost of US beans in China is currently similar to Brazilian soyabeans even with the 25-percent tariff, but Chinese crushers are reluctant to take US supply as they fear authorities may not approve cargoes.
"The government's signal on this is clear - do not buy US beans," said a senior analyst with a major futures brokerage in China. "Basically, all shipments for the fourth quarter are from Brazil even though prices of Brazilian beans are very high."
Premiums for Brazilian beans have shot to a record $2.50 a bushel over the November CBOT contract, which was trading at $8.51-1/4 a bushel at 0655 GMT on Wednesday. That compares with zero premium for freshly harvested US soyabeans. Brazil churned out 119.5 million tonnes of soyabeans in 2017/18 and exported 76.7 million tonnes, according to the US Department of Agriculture.
CHANGING TRADE FLOWS
Over the near term, strong Chinese demand could force Brazilian domestic crushers to export their expensive local beans to China and import cheaper supplies from the United States, trade sources said.
Argentine crushers have been following a similar strategy, and recently booked 3-4 cargoes of US soyabeans while shipping their own local supplies off to Chinese buyers, according to traders at a recent oilseed conference in China.
"Brazil and Argentina will import soyabeans from the United States as they are selling more to China," said Ole Houe, director of advisory services at brokerage IKON Commodities in Sydney.
China's purchases from the United States for the beginning of the 2018-19 crop year that began on Sept. 1 are currently a fraction of the long-term average, just as US farmers start harvesting a new record crop estimated by the USDA at over 127 million tonnes.
And the trade war could have long-term ramifications as China looks to cut total full-year soyabean purchases for the first time in 15 years, seeking alternatives to soyameal in animal feed.
The country this month cut its forecast for 2018/19 soyabean imports to around 84 million tonnes, down from about 93 million tonnes a year earlier.
China's soyabean imports had climbed uninterrupted since 2003/04 as the nation's rapidly-expanding middle class develops a taste for meats, often produced from livestock given soyameal-based feed.

Copyright Reuters, 2018

Comments

Comments are closed.