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Chinese purchases of US soya beans bounce back

US soya bean exports to China increased in January, reaching 1.4 Mt, up from only 69,079t in December, and accounting for 30.7% of total US soya bean exports in January.

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According to shipping association Bimco, this was the highest monthly exports to China since March 2018, which marked the start of the trade war, and was largely due to good will purchases by Chinese buyers in an effort to advance trade talks.


In January, for the first time since October 2018, exports of US soya beans were higher than those in the previous month. Exports grew to 4.5 Mt in January 2019 from 3.7 Mt in December 2018. Despite increasing volumes, soya bean exports in January were 19.7% lower than the 5.5 Mt exported in January 2018.


“Although volumes remain considerably lower than what would be expected in a normal season, the increased exports to China bring hope for the US that Chinese buyers will return once trade tensions are resolved,” said Peter Sand, Bimco’s chief shipping analyst.


“Higher US exports combined with the start of the Brazilian exporting season is good news for Panamax and Supramax vessels catering to these trade.”

(Source: Bimco, US Census Bureau)
(Source: Bimco, US Census Bureau)

Data from the USDA on soya beans inspected and/or weighed for export suggest that while total exports in February were similar to those in January, at 4.4 Mt, exports to China rose further to 2 Mt.


The 2018/2019 marketing year started in September 2018, and by the beginning of January, exports to China were 97.7% lower than the same period in the 2017/2018 marketing year.


However, by 21 March 2019, this gap was brought down to 81.9% on the back of higher exports in particular to China, in February and the first few weeks of March.


“In the coming months, US soya bean exports can go one of two ways, either following their usual seasonality: falling from March through to the start of the next export season,” said Sand.


“Or, because of full stocks following the disappointing export season, the US would be able to increase its offseason exports if it can find willing buyers. Any shipowner would love the latter to be the case, but they should be prepared for an outcome somewhere between the two possibilities.”

(Source: Bimco, USDA)
(Source: Bimco, USDA)

The 25% tariffs on Chinese soya beans, imposed in July 2018, led to 96% lower soya bean exports to China in the second half of 2018 than the same period in 2017. Exports between July and December 2018 came to only 0.78 Mt, compared to the 22.1 Mt in the last six months of 2017.


In 2017, 69.6% of all US soya bean exports to China were in the second half of 2019, in 2018 only 9.3% of exports to China happened in the second half of the year.


In recent years China has been the dominant market for US soya bean producers, accounting for 31.7 Mt in 2017, 60.4% of total US soya bean exports that calendar year, and greatly out-shadowing the second largest market, Indonesia, which took 2.4 Mt in 2017.


In 2018, China remained the largest buyer of US soya beans, but its dominance fell dramatically. In the last six months of the calendar year, only 3.4% of US soya bean exports were sent to China.

(Source: Bimco, US Census Bureau)
(Source: Bimco, US Census Bureau)

In the second half of 2018, the Netherlands became the largest buyer of US soya beans, followed by Argentina and Egypt. Total exports to the Netherlands and Egypt in 2018 grew 84.5% and 214.9% respectively compared to 2017, and Argentina went from 276 tonnes to over 2 Mt.


“All the largest destinations for soya bean exports in the second part of 2018 are short-haul destinations when compared to the China trade,” explained Sand. “In shipping, the sailing distance is often more important than the transported volumes.”


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