November 26, 2019
China buys Brazil soybeans over US-China trade deal uncertainty
More than 20 cargoes of Brazil soybeans were booked by China as the US-China trade deal uncertainly left importers rushing to lock supplies for early next year, reported Reuters.
Two traders who did not want to be identified cited attractive margins as additional reasons in purchasing the new crop of Brazil soybeans.
Purchases are set to be delivered after the new harvest is ready for market early 2020. Other traders have said Argentina and United States soybean cargoes were also booked last week, totalling 30 cargoes.
Because of high tariff on US imports, China has reduced its total purchase of US soybeans in 2019. The tariffs are expected to be lifted once both countries have come to an agreement on the first phase of a trade deal. However, discussions may roll into next year and buyers are left unclear about market conditions.
The US is the second largest supplier of soybeans to China.
Darin Friedrichs, senior Asia commodity analyst at broker INTL FCStone said purchasing soybeans from Brazil is the best decision considering market uncertainty about US supplies.
Soybean purchasers from China are sitting on tight stocks following a 16-month protracted trade war between the US and China.
CFD-SBMST-NATN, the national soymeal stock dropped to 355,100 tonnes in the week ending November 19, 2019, the lowest in six years.
Soybean crushers have expected poor demand as the African swine fever has shrunk more than 40% the total swine herd in China since it was first discovered last year.
A feed producer in northeast China said feed producers and downstream companies are willing to stock high inventories of soybeans with decreased demand.