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ARGENTINA | 16-08-2019 14:26

China boosts Brazil soy imports as Argentina hoards crops

Chinese companies purchased between 1.5 and 2 million metric tonnes of soy as Argentine farmers withhold beans to stave off currency fall.

China is stepping up its soybean buying in Brazil as growers in Argentina continue to hoard and the Asian nation avoids American oilseed after an escalation in trade tensions between Washington and Beijing.

Private and state-owned companies bought 25 to 30 cargoes of soy from Brazil this week through Thursday, according to people familiar with the matter, who asked not to be identified because the deals are private. That’s equivalent to about 1.5 million to 2 million metric tonnes and is helping push up the premiums buyers need to pay for soy at Brazilian ports.

Brazilian orders come after China, the top importer, stopped purchasing American soy as the spat with the US deepens and farmers in Argentina are withholding beans as a hedge against currency depreciation due to election uncertainty. While premiums in Brazil rose, soybean futures in Chicago are heading for a weekly loss even after the US government reported smaller-than-expected plantings.

Chinese buyers are scooping up Brazilian supplies as they still haven’t bought enough to cover their needs through October, the people said. While Brazil has so far been able to meet China’s demands, inventories are now dwindling and Beijing is at risk of not being able to fulfill its needs.

Brazilian soybean inventories are now projected to fall to 2.6 million tonnes at the end of the season, the lowest in 20 years, according to the country’s soy-processor group, Abiove. That’s also down from a July forecast of 5.6 million tons and compares with 3.6 million tonnes last year.

Chinese purchases of Brazilian beans last year surged after Beijing slapped 25-percent retaliatory tariffs on US exports. While African swine fever this year is hurting soybean-meal demand as pig herds that feed on the commodity shrink, China still risks a supply shortage in the fourth quarter, one of the people said.

– BLOOMBERG 

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