China buys Argentine soybeans after tax cuts, leaving US farmers out in the cold

Chinese buyers ordered at least 10 cargoes of Argentine soybeans after Buenos Aires lifted export duties on the grain on Monday, three traders said on Tuesday. This was another blow to American farmers, already deprived of their main market and suffering from low prices.

Argentina’s temporary tax measure increases the competitiveness of its soybeans, prompting traders to buy cargoes to secure supplies in China for the fourth quarter—a period typically characterized by US shipments but now overshadowed by Washington’s trade war with Beijing.

According to two traders with direct knowledge of the situation, Panamax tankers carrying 65,000 metric tons each are scheduled to deliver in November, with CNF (cost plus freight) prices quoted at a premium of $2.15 to $2.30 per bushel to the November soybean contract on the Chicago Board of Trade (CBOT).

One trader reported that Chinese buyers have booked 15 cargoes.

These deals represent a further blow to U.S. farmers, who are missing out on billions of dollars in soybean sales to China in the middle of their main marketing season, as unresolved trade talks freeze exports and competing South American suppliers, led by Brazil, step in to fill the gap, according to traders and analysts.

“These deals were concluded last night after Argentina’s export tax decision,” said one trader, who declined to be identified because he was not authorized to speak to the media. “This clearly means China doesn’t need American beans.”

According to traders, China, the world’s largest soybean buyer, has not yet purchased a single shipment of American soybeans from its fall harvest.

On Friday, Chinese President Xi Jinping and US President Donald Trump spoke by phone, but neither side provided any agricultural updates, further pushing Chicago Board of Trade soybean futures, which were already near a five-year low, lower.

Earlier this month, Reuters reported that China had nearly completed its soybean purchases for October delivery and had reserved about 15% of its November needs, all from South America. According to traders, in previous years, China had purchased 12-13 million tonnes of soybeans from the US by this time for delivery in September-November.

TEMPORARY TAX RELIEF

The Argentine government announced that a temporary suspension of grain taxes would last until October or until reported exports reach $7 billion, sending Chinese soybean meal futures lower on Tuesday.

As of 06:39 GMT, the most-active Dalian soybean meal futures in China fell 3.5%, while the most-active Dalian soybean oil futures fell 3.5%.

“The price decline was primarily driven by Argentina’s lifting of grain export duties yesterday, which made prices more attractive to Chinese buyers given favorable crushing margins,” said Johnny Xiang, founder of Beijing-based AgRadar Consulting.

“However, the impact of this news is likely to be short-lived, as the policy will only be in effect for just over a month, and Argentina’s overall stocks are limited,” he added.

Argentina typically levies a 26% export duty on soybeans.

China’s soybean imports reached record levels in May, June, July, and August, leading to increased stockpiles, partly as a hedging measure by buyers against potential supply disruptions in the fourth quarter.

“Looking forward, the key factors to watch are actual purchases and shipments of Argentine soybeans, as well as the outcome of the US-China negotiations and how they may impact soybean imports in the fourth quarter and early next year,” said Wan Chengzhi, an analyst at Capital Jingdu Futures.

Tags: China, soybean, Argentina