Chinese buyers look to delay soybean cargoes from American suppliers

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Chinese soybean buyers are asking sellers in the United States to delay cargoes due to be shipped in July until August, two sources familiar with the matter said, raising fears of cancellations like ones that roiled the market last year.

The contract renegotiations come as the world’s top two economies remain locked in a protracted trade war that prompted China to sharply cut purchases of the oilseed from its second-largest supplier starting from the middle of last year.

Soybean imports from the US virtually dried up in the second half of last year, before Beijing agreed to buy nearly 14 million tonnes from American farmers over December to March during a temporary truce in the trade spat.

More than 6 million of those tonnes have already been shipped to China, but about 7 million tonnes bought before talks broke down in May still need to be delivered.

Beijing’s state-owned companies were trying to roll about 2 million tonnes of July cargoes into August, said a source with direct knowledge of the matter.

“It isn’t a washout yet. But it is strange that [state firms] suddenly wanted to delay all July shipments by a month now,” the source said.

A US export broker confirmed he had been approached by Chinese buyers to delay cargoes he had sold them, and that he was working with them to execute the request. The total number of shipments shifted to August so far was well below the 2 million tonnes that buyers had sought to roll, the broker said. He declined to estimate the rolled volume.

The two sources declined to be named as they are not authorised to speak to the media.

Neither Sinograin, which manages China’s soybean reserves, nor the top state-owned grains trader Cofco replied to requests for comment on the issue.

Delaying shipments could exacerbate problems that US exporters are already facing, with an unprecedented backlog of soybeans still to be shipped as widespread flooding in the US Midwest challenges logistics.

A third source, a trader with an international trading company based in Beijing, said he doubted whether all the US sellers would be willing to delay the shipments.

Rolling over to August was not a huge concern, the sources said, but any further delay after that would be problematic, with the US new-crop harvest due in September set to swell stocks and push down prices.

China would incur steep penalties if it tried to cancel the orders, and it still needs the soybeans, traders have said.

Beijing might be trying to buy more time with the delay, one of the sources said, giving it the option to still cancel cargoes if its trade talks with Washington do not go well.

Some US exporters were open to rolling shipments because more export-grade soybeans in storage in the upper Midwest farm belt would be available once flooded rivers recede and barge shipments resume.

US President Donald Trump said on Wednesday he still expected to meet Chinese President Xi Jinping at the G20 summit in Japan late this month, but he also threatened to increase tariffs on Chinese goods if Beijing did not reverse its stance on structural reforms.

Beijing recently decided to stockpile the remaining US soybean cargoes waiting to be shipped, rather than crush them for immediate sale as a feed ingredient.

Source:www.scmp.com/news/china/diplomacy/article/3014512/chinese-buyers-look-delay-soybean-cargoes-american-suppliers

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