Reuters reported on Tuesday that Chinese buyers had reserved at least ten shipments Argentinean soybeans after Buenos Aires decided to remove grain export taxes.
The US farmer, already struggling with low prices and being excluded from the primary market, is further disadvantaged by this development.
Argentina’s temporary policy on tax has increased the competitiveness and quality of its soya beans, and traders have been able to obtain shipments in China for their fourth quarter inventories.
The US typically dominates this period, but the trade war between Washington and Beijing is creating uncertainty.
The report states that 65,000 metric ton (Panamax) of soybeans are expected for November, and the Cost and Freight prices (CNF) quoted were $2.15-2.30 more per bushel than the Chicago Board of Trade November soybean contract.
According to a Reuters article, one of the traders quoted said that 15 shipments had been booked by Chinese buyers.
The US faces a setback
These deals are a setback for US farmers.
China is losing billions of dollars in sales during the peak season for their marketing.
According to traders and analyst, this is because of stalled negotiations, which has halted the exports. This allowed South American competitors to take over market shares, especially Brazil.
China is encouraged to buy Argentine soy by the temporary tax reduction.
Reports from traders indicate that China, which is the largest soybean buyer in the world, has yet to purchase any US soybeans harvested during the autumn harvest.
The recent telephone call between US President Donald Trump and Chinese President Xi Jinping on Friday did not yield any agricultural updates.
Chicago soybean futures are now at their lowest levels in five years due to this lack of progress.
Prior reports indicated that China was close to finalising its purchases of soybeans for shipment in October and had secured 15% exclusively from South America, as part of its requirements for November.
Traders had predicted that China will have purchased 12-13 millions tons of US corn by September or November in the previous years.
Tax Break
The price of Chinese soymeal fell on Tuesday after Argentina announced a suspension of the temporary grain tax.
The measure is in place until the end of October, or when declared exports reach $7 billion.
Early in the morning, China’s two most active Dalian soybean meal and oil futures experienced both a decline of 3.5%.
Argentina taxes soybean exports by 26%.
China’s imports of soybeans have reached record levels in June, August, May and July.
The surge in inventory was partly due to the buyers’ hedges against potential supply disruptions during the fourth quarter.
Wan Chengzhi is quoted as saying, “Looking forward, the key factor to watch is actual Argentinean soybean purchases and arrivals along with the result of US-China discussions and how it might affect soybean exports in the fourth and early next years.”
The post Chinese buyers prefer Argentine soya after the elimination of export taxes may be updated as new information unfolds.
