China Is Buying More Brazil Soy in Signs of Shifting Trade Flows
††† South American nation is cutting into U.S.ís key sales window
††† In a twist, the shift in trade flows may drive down soy prices
By Tarso Veloso Ribeiro, Tatiana Freitas, and Alfred Cang, Bloomberg†
November 16, 2021
China is making big purchases of soybeans from Brazil, an unusual move for this time of year.
The Asian nation needs soybeans to feed its expanding hog herds, and November is a prime time for the U.S. to sell its crops, having just finished the harvest. Supplies are at their peak and American prices should be the most attractive in the world.
Yet this year, Brazil is even cheaper and cutting into the U.S.ís key sales window. Last week China bought at least 30 soybean cargoes from the U.S. and Brazil, with more than half coming from the South American nation, according to people familiar with the matter. The move shows that Brazil, already the No. 1 shipper, is becoming ever more competitive on world markets.
In an unusual twist, this slight shift in global trade flows could send world soybean prices falling. If Brazil steals market share from the U.S., American stockpiles could rise, driving down prices at the exchange in Chicago -- which is also the benchmark for global pricesÖ
... While Chinaís purchase of around 30 cargoes is substantial, itís not atypical for the season, according to traders and analysts.
Brazilís soybeans are increasingly competitive compared to the U.S., the No. 2 shipper. Its crops are winning on the world marketplace because everything from land to labor to fuel is cheaper, and itís benefiting from weak local currency...
more, including chart