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China soybeans prices near 2-month low since start of US-China trade war

CFR China imported soybeans has fallen 15.75% since October 16, when Brazilian soybeans supply was at its lowest, to be assessed at $391.04/mt Monday, S&P Global Platts data showed.

The fall in prices was mainly due to the possibility of the removal of the 25% tariff on US origin soybeans into China.
The price of Brazilian origin soybeans cargoes on CFR China basis has decreased by more than two times from 363 cents/bu over Chicago Soybeans futures to 140 cents/bu during the same period, according to Platts data.

Despite the continuous decline in Brazilian soybeans prices for the past week, Chinese buyers showed little interest in Brazilian soybeans since the G-20 summit, on hopes of cheaper US soybeans heading to China.

At the same time, the sharp fall in downstream Chinese domestic soybeans meal price has deteriorated the crush margin for all the crush mills in China. “If the crushing margin continues to weaken, they might skip January demand, and only start operating when there is a healthier crush margin,” a trader said.

With low incentive to maximize the mills’ production capacity, soybeans stock was running high along most of the coastal soybeans storage facilities, further reducing demand for prompt month soybeans shipments.

Due to how closely entwined this political dispute is with Chinese soybeans imports, many believe the Chinese soybeans market would only recover after the resolution of the US-China trade dispute, which could potentially take months.

“There are so many details to be negotiated, it’s not easy to hope for a quick result,” a trader said.
Source: Platts

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