Chinese buyers snap up Argentine soybeans after export tax cut

Chinese buyers have booked at least 10 soybean cargoes from Argentina, three traders told Reuters on Tuesday (23), taking advantage of lower prices to build up stocks for the fourth quarter amid ongoing trade tensions between China and the United States.

The deals followed Argentina’s decision announced on Monday (22) to temporarily remove export taxes on grains and their derivatives, including soybeans, making its exports more competitive in the global market.

The shipments, on Panamax vessels with a capacity of 65,000 metric tonnes each, are scheduled for November, with CNF (cost and freight) prices quoted at a premium of $2.15 to $2.30 per bushel over the November soybean contract on the Chicago Board of Trade (CBOT), according to two traders with direct knowledge of the matter.

One of the traders said Chinese buyers booked 15 cargoes.

U.S. farmers are losing billions of dollars in soybean sales to China in the middle of the marketing season, as prolonged trade negotiations stall exports and rival South American suppliers, led by Brazil, fill the gap, traders and analysts said.

“These deals were closed last night, after Argentina’s decision on the export tax,” said one trader, who asked not to be identified because he was not authorized to speak to the press. “It clearly shows that China doesn’t need U.S. soybeans.”

China has not yet bought any cargo from the U.S. fall crop.

The Argentine government said the temporary suspension of the grain export tax will last until October or until declared exports reach $7 billion, a move that pushed Chinese soybean meal futures lower on Tuesday.

At 02:07 GMT, the most-traded soybean meal futures in Dalian were down 3.5%, while the most-traded soybean oil futures fell 3.8%.

“The price drop was mainly due to Argentina’s removal of the grain export tax yesterday, which made prices more attractive for Chinese buyers, given the favorable crushing margins,” said Johnny Xiang, founder of Beijing-based consultancy AgRadar.

“But the impact of this news is likely to be short-lived, since the policy will last just over a month and Argentina’s total supply is limited,” he added.

Source: Money Times

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