China Soy Buyers React to Tariffs

June 20, 2018 09:43 AM
There are still more than two weeks before China imposes tariffs on imports on U.S. soybeans, but already there are signs of a shift in buying behavior.

(Bloomberg) -- There are still more than two weeks before China imposes tariffs on imports on U.S. soybeans, but already there are signs of a shift in buying behavior.

There’s higher demand for shipments of Brazilian soy for delivery in August, September and even October, said Steve Cachia, a director at the Brazilian brokerage Cerealpar. That’s significant because international buyers usually make most of their South American purchases in the first half of the year, when Brazil is harvesting its soybean crop.

But with the 25 percent tariffs on American soybeans due to go into effect July 6, Chinese importers are focusing more than usual on Brazil, according to Pedro Dejneka, partner at Chicago-based MD Commodities.

"Brazil will probably export high volumes to China through October," Dejneka said in a telephone interview, "After that, Brazilian supplies will be low and China will be forced to return to the U.S. market."

Brazil may ship more than 5 million metric tons to China monthly through October, though that pace will be slower than the May peak of around 9 million, he said.

Brazil reaped a record 118 million tons of soybeans in the 2017-18 season, according to state agricultural company Conab. Shipments should reach as much as 76 million tons, Dejneka said. Brazil exported 68.2 million tons in the previous season, according to Conab.

The higher demand for Brazil’s soybeans has spurred premiums paid at domestic ports to the highest since April. On Wednesday, importers payed a premium of $1.565 a bushel over Chicago futures to buy soybeans for loading in September at the port of Paranagua. The measure has risen 57 percent this month, according to data from Commodity 3.


Copyright 2018, Bloomberg

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Spell Check

New York, NY
6/27/2018 02:02 AM

  The US is losing a big costumer. China alone takes about 70% of the world's soybean import as you can see in this article ( And China has been by far the largest consumer of US soybeans. Levying tariffs on soybeans would make China find an alternative supplier such as Brazil. Good for Brazil.

Midlothian, TX
6/27/2018 03:57 PM

  Yes. the Chinese will still have to purchase a limited amount of soybeans from the US in the fall. However, with the fall in prices in the futures markets, they can lock in prices for delivery that will offset some of the applied tariff. The winner here are non-US soybean producers. The losers are the American soybean farmers who were already enduring low farm product prices. Also winning are the US steel producers. Meanwhile all the over whelming number of industries that use steel are losing as may the American Consumer.


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