The USDA (United States Department of Agriculture) informed, on Wednesday (15), two cancellations of soybean purchases. One of them was from China, with 132,000 tons, and 196,000 tons from undisclosed destinations, and both refer to volumes from the 2021/22 harvest. As with sales, cancellations made on the same day, by the same buyer, with volumes equal to or greater than 100,000 tons, must always be reported to the department.
The logistical complications suffered by the US after the passage of Hurricane Ida and aggravated by the arrival of Tropical Storm Nicholas have severely compromised the flow of US grains and this may have been one of the reasons for the cancellation.
“Probably, these sales should be shipped from the Gulf between October and November, a period in which American logistics are compromised. What used to be September shipment should be October, October goes to November, and so on,” explains the Agrinvest Commodities team . “However, the proposal to extend the contracts depends on the acceptance of the counterpart – the buyer -, which, apparently, was not accepted”.
Similarly, China has already bought ten ships of soybeans from Brazil for October shipment, according to traders have reported, it should meet its needs and ensure coverage of its processing companies. “The United States is losing an important part of its export program,” explains Eduardo Vanin, market analyst at Agrinvest.
In addition to Brazil, the Chinese are also making soybean purchases in Argentina and Uruguay, according to information gathered by the broker. However, Vanin still explains that “China’s presence for October shipments in Brazil keeps prices very high, hurting local crushing margins.” Likewise, for the US, the signs may be of exports lower than the 56.88 million tons estimated by the USDA for the 2021/22 season.
“For China, the logistical blackout and the diversion of its purchases to South America represent a reduction in its processing”, complements the analyst. Vanin also explains that despite the frequent presence of the Asian giant, its oilseed purchases are still showing low volumes in view of its needs and, mainly, in relation to the current period, which is traditionally more heated for the consumption of animal feed.
“Soybean meal sales, which went from 5.3 million tonnes, fell sharply again in September. Due to the carriage’s floor, sales this month will barely exceed 2.5 million tonnes. It’s not a good sign, demand remains sick,” says Vanin. “Simply the world’s biggest feed consumer is tying up a $20 bill to every hog slaughtered, China’s pig farm negative margins continue.”