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Major changes hit soya bean trades

Iran unexpectedly emerged as the number one buyer of US soya beans in August, while US soya exports to China were down 31% in the first eight months of 2018, and 95% in August alone.


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With the US soya bean export season now underway, the effects of the US-China trade war on this key agriculture commodity have begun to play out. Consequently, shipping association Bimco has said that the October-January peak season for US exports of soya beans will attract much more attention in 2018 than previously.


In terms of seaborne tonnes of soya beans, 31.7 Mt were shipped from the US Gulf and US North West coast to buyers in China in 2017.


Bimco analysis showed that there were only four months between January 2016 and July 2018 that the US exported no more than one 82,000 dwt Panamax dry bulk cargo to Iran. However, in August 2018, 414,000t – the equivalent of five Panamax loads of soya beans – were shipped to Iran. This amounts to 13.2% of total US soya bean exports in August.


US seaborne soya bean exports to China 2016-18 (source: Bimco, US census)
US seaborne soya bean exports to China 2016-18 (source: Bimco, US census)

Peter Sand, Bimco’s chief shipping analyst, commented: “Bimco anticipated trade lanes to change due to the ongoing trade war between China and the US. But it’s fair to say that Iran’s massive and sudden appetite for US soya beans is very unexpected, and the reason is currently unknown.


“From a shipping perspective it’s vital to have continued exports sent to far-away destinations, deploying the many ships in position right now to cater for the seaborne transportation demand.”


During the first eight months of 2018, the US has exported 7.84 Mt of soya beans to China. This was down by 3.54 Mt from 11.38 Mt in the same period in 2017.


In August, only 67,000t of soya beans have been shipped from the US to China. This is a reduction of 95% from the 1.2 Mt being shipped in August last year.


“The Chinese appetite for US soya beans has been muted all year, in absolute as well as relative terms,” said Sand. “If this is the result of Chinese farmers changing the diet of their pigs, from a much higher soya meal content than the global average, to a normalised and lower one, to reduce US imports, they may not need to find a replacement producer – a full replacement that may also be very difficult to find.”


During the first eight months of 2018, Brazil exported 50.9 Mt of soya beans to China. This is an increase of 6.8 Mt (+15%) from 44.1 Mt exported during the first eight months of 2017.


As the Brazilian soya bean export season is ending soon (October/November), Bimco believes it is fair to conclude that Brazilian exports have not filled the gap fully – as the US exported 31.7 Mt to China in 2017.


“As many long-haul fixtures are lost on the way when Chinese imports of soya beans from the Atlantic basin drops, the dry bulk shipping industry feels the pain,” stated Bimco.


During the first eight month of 2017, 46% of total annual exports were shipped, leaving the lion’s share of the trade to the final four months of the year. US exports in the first eight months of 2018 were up by 9.7%, equivalent to 2.3 Mt, with the peak season about to kick in.


Bimco pointed out that it has been Egypt and the Netherlands who have grown their imports the most so far. But Pakistan, Taiwan, Vietnam, Spain and Iran have also increased imports of US soya beans. In total, said Bimco, these countries have contributed to more than balancing out the 3.5 Mt decrease in Chinese imports in the first eight months of 2018 compared to the same period in 2017.


“Going into the final four months of the year (peak US export season), a period that saw China taking 20.3 Mt out of the total 28.5 Mt last year, it will be increasingly difficult for US exporters to counterbalance lower Chinese imports with new buyers,” concluded Sand.


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