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August soybean vessel arrivals in China seen rising on month: Cofeed

Highlights

August arrivals to eclipse Aug 2019 deliveries

Vessel arrivals from Brazil highest for August

Focus now seen shifting to US beans

New Delhi — Soybean vessel arrivals in China are expected to rise in August from July levels as crushing demand gathers pace, with most of the shipments arriving from Brazil, sources told S&P Global Platts.

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About 158 vessels carrying 10.36 million mt of soybeans are expected to arrive in China in August, up from actual arrivals of 147 vessels seen in July, Beijing-based analytics firm Cofeed said.

In terms of volumes, August arrivals will be about 730,000 mt more than July deliveries, according to Cofeed data.

Soybean vessel arrivals in August are also set to eclipse August 2019 levels, when only 134 vessels carrying 8.62 million mt of beans arrived in China, Cofeed said.

Most of the vessels are arriving from Brazil, which has seen its soybeans trading at a premium over other origins for the last few months.

SOYBEX FOB Santos has been assessed higher than SOYBEX FOB New Orleans since April, with Brazilian soybean assessments hitting a near two-year high in August at $395.10/mt, according to Platts data.

Brazil top supplier

Higher arrivals from Brazil were mostly driven by a weaker Brazilian real, which encouraged greater sales by farmers, while demand prospects from Chinese crushers continue to improve as the country reopened following the pandemic.

In the last 12 months, the Brazilian real has been losing value against the dollar, trading at 5.40 to the dollar on Aug. 13, down from 4.30 in the early part of the year.

While Brazil has been the largest soybean supplier to China for the last few months, the US is expected to take over soon as the top supplier, with its harvest expected to begin next month. Brazil's next soybean harvest will begin in 2021.

Brazil is said to have lean exportable supplies right now, which is usual during this time of the year.

Domestic crushers in Brazil are continuing to secure supplies aggressively for the remaining of the year, while sales by farmers are now seen shifting to the new crop, leading to tighter supplies, according to sources.

A total of 65 vessels with 4.19 million of soybeans have sailed or are expected to sail to China in August, according to shipping line-up data from Brazil's Williams agency.

Focus now on US beans

China has been now looking to cover its demand for November-December, with most of September and October shipments covered, according to sources. This comes at a time when crushing margins in China have been improving, most recently on the account of a surge in soybean oil prices.

While private buyers in China were inquiring about US soybeans, the bulk of US bean purchases are now coming from state-owned companies.

China has been ramping up its purchases of US soybeans and other agricultural products in the past few weeks, with several large-volume flash sales reported by the US Department of Agriculture.

In an earnings conference late July, Archer Daniels Midland CEO Juan Luciano said China is expected to buy up to 13 million mt of soybeans from the US in the fourth quarter of 2020.

The US is in the midst of soybean crop development, with 92% of the crop having bloomed so far, according to the USDA. However, a recent powerful storm that swept across parts of the Midwest flattened soybean and corn fields, especially in Iowa, raising concerns among farmers. The markets are keeping a close eye on crop loss estimates, with more clarity on the damage expected by the week ending Aug. 21.