Quite unexpectedly, China has recently bought less soybeans from Brazil; A few weeks ago, it still seemed that the South American country would benefit from the trade dispute between the US and China.
China's importers started buying soybeans in Brazil sooner than usual after Beijing threatened to impose 25% punitive tariffs on US bean imports. However, since last week China has been losing demand for compound feed companies in China. The panic purchases that we saw in April are gone.
Because the pigmeat in China is writing losses, the demand for soybean meal is very weak. Since last week, short-term orders have fallen drastically. China imports more than 60% of the world's soybeans. In July, as the US trade dispute escalated, Brazilian soybean premiums rose to $ 160 / tonne over the CBoT front month, now the premium has dropped to $ 94 / tonne; usual at this time of year 50-60 USD / ton.
The high premiums prompted traders from Europe and Asia to stock up on their soybean needs in the US.
However, analysts believe that China's weak demand for Brazilian beans will soon be over, as a record harvest will push into the market in the coming months. The latest crop estimates are now at 119 million tonnes and exports are expected to rise by two million tonnes to 72 million tonnes this year.
If the Chinese have less import demand in June and July, they already have 20 shiploads from Brazil in the order book for August. On the other hand, yesterday's USDA report shows that China will import less soybeans in 2018/19 for the first time in 15 years. This is also due to the lowest pig prices, which were significantly lower than production costs in the first quarter of 2018. Most soybeans in China are currently overcrowded with meal and oil. This is due to the weak demand from the compound feed manufacturers who are currently disposing from hand to mouth.
Text: HANSA Derivatives Trading GmbH /
