Chinese buyers scooped up at least 20 cargoes of Brazilian soybeans last week as uncertainty over a trade deal with the United States sent them rushing to lock in supplies, traders said Nov. 25.
Importers also jumped on the new-crop Brazilian beans because of attractive margins, said two traders who declined to be identified.
The purchases were for delivery when the new harvest hits the market early next year, they said. Some U.S. and Argentinian cargoes were also booked last week, one of the traders said, with total purchases of about 30 cargoes.
Chinese buyers have bought significantly fewer soybeans from the United States this year due to high tariffs on imports, which are expected to be lifted if the two sides agree to a Phase 1 deal.
Crushers in China have nearly used up a 10-million-tonne tariff-free quota awarded by Beijing in October. The waivers set off a flurry of U.S. soy sales which are now being loaded and shipped.
About 1.35 million tonnes of U.S. soybeans were inspected and loaded for export to China last week, the most in two years, according to U.S. Department of Agriculture data.
But without more duty waivers, U.S. soybeans may struggle to compete with Brazil in the next commercial year.
“They’re running out of road here so they’re going to switch to another destination,” said Dan Basse, president of AgResource Co.
Completion of the first phase of a trade deal risks sliding into next year, Reuters reported last week, leaving buyers uncertain about market conditions.
“Buying out of Brazil is probably a good hedge at this point. There’s plenty of uncertainty around U.S. supplies so it’s probably a good idea to have at least some Brazil locked in,” said Darin Friedrichs, senior Asia commodity analyst at INTL FCStone.
After a 16-month-long trade war, China’s soybean buyers who crush the beans into meal to feed the world’s largest pig herd are sitting on tight stocks.
National soymeal stocks plunged to a six-year low of 355,100 tonnes in the week ending Nov. 19.
Crushers are also seeing poor demand amid the worst-ever outbreak of disease in China’s pig herd, which has shrunk by more than 40 per cent since a year ago.
“Feed producers and downstream companies are reluctant to build up high inventories as demand is bad,” said a purchase manager with a feed producer in northeastern China.