Reuters US Business
By Naveen Thukral and Ella Cao
SINGAPORE/BEIJING (Reuters) -Chinese buyers booked at least 10 cargoes of Argentine soybeans after Buenos Aires on Monday scrapped grain export taxes, three traders said on Tuesday, dealing another setback to U.S. farmers already shut out of their top market and hit by low prices.
Argentina's temporary tax move boosts the competitiveness of its soybeans, prompting traders to secure cargoes for fourth-quarter inventories in China, a period usually dominated by U.S. shipments but now clouded by Washington's trade war with Beijing.
The Panamax-sized shipments of 65,000 metric tons each are scheduled for November, with CNF (cost and freight) prices quoted at a premium of $2.15-$2.30 per bushel to the Chicago Board of Trade (CBOT) November soybean contract, two traders with direct knowledge of the matter said.
One of the traders said Chinese buyers had booked 15 cargoes.
The deals are a fresh blow for U.S. farmers, who are missing out on billions of dollars of soybean sales to China halfway through their prime marketing season as unresolved trade talks freeze exports and rival South American suppliers led by Brazil step in to fill the gap, traders and analysts have said.
"These deals were done last night after Argentina's decision on export tax," said one of the traders, declining to be identified as they were not authorised to speak with media. "It clearly means that China doesn't need U.S. beans."
China, the world's biggest buyer of soybeans, has yet to purchase any U.S. soybean cargoes from its autumn harvest, traders have said.
On Friday, Chinese President Xi Jinping and U.S. President Donald Trump held a phone call but neither side reported any update on agriculture, further squeezing Chicago soybean futures already near 5-year lows. [GRA/]
Earlier this month, Reuters reported that China had nearly completed soybean purchases for October shipment and booked around 15% of its November needs, all from South America. By that time in previous years, traders said, China would have bought 12-13 million tons from the U.S. for Sept-Nov shipment.
TEMPORARY TAX BREAK
Argentina's government said the temporary grain tax suspension will last through October, or until declared exports reach $7 billion, a move that drove Chinese soymeal futures lower on Tuesday.
As of 0639 GMT, China's most-active Dalian soymeal futures were down 3.5% and the most-active Dalian soybean oil futures dropped 3.5%.
"The decline in prices was mainly due to Argentina's removal of grain export taxes yesterday, which made prices more attractive to Chinese buyers given the favourable crushing margins," said Johnny Xiang, founder of Beijing-based AgRadar Consulting.
"But the impact of this news is likely to be short-lived, as the policy will last for just over a month and Argentina's overall supply is limited," he added.
Argentina typically imposes a 26% export tax on soybeans.
China's soybean imports hit record highs in May, June, July and August, boosting inventories, partly as a hedge by buyers against potential fourth-quarter supply disruptions.
"Looking ahead, the key factors to watch are actual Argentine soybean purchases and arrivals, along with the outcome of U.S.-China talks and how they might affect soybean imports in the fourth quarter and early next year," said Wan Chengzhi, an analyst at Capital Jingdu Futures.
(Reporting by Naveen Thukral in Singapore and Ella Cao in Beijing; Editing by Tony Munroe and Kim Coghill)
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