Chinese importers scoop up Brazilian soybeans amid U.S. trade
uncertainty
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[November 25, 2019]
By Hallie Gu and Dominique Patton
BEIJING (Reuters) - Chinese buyers scooped
up at least 20 cargoes of Brazilian soybeans last week due to
uncertainty over a trade deal with the United States that sent them
rushing to lock in supplies, traders said on Monday.
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 their
second largest supplier, the United States, this year, due to high
tariffs on imports, which are expected to be lifted if the two sides
agree to the first phase of a trade deal.
Completion of the first phase risks sliding into next year, Reuters
reported last week, leaving buyers uncertain about market conditions.
Even after leaders from the two countries sent positive signals on an
initial deal to defuse the protracted trade war, markets are concerned
that the trade talks could flounder.
"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 broker INTL FCStone.
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Soybeans in a field on Hodgen Farm in Roachdale, Indiana, U.S.
November 8, 2019. REUTERS/Bryan Woolston/File Photo
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 <CFD-SBMST-NATN> plunged to a six-year low
of just 355,100 tonnes in the week ending Nov. 19.
Crushers are however also seeing poor demand amid the worst ever
outbreak of disease in China's pig herd, which has shrunk by more
than 40% 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.
(Reporting by Hallie Gu and Dominique Patton in Beijing; Additional
reporting by Karl Plume in Chicago, editing by Louise Heavens)
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