Soybean crushers in China, the biggest importer, are draining inventories as they expect prices to drop on Brazil’s record harvest, even as the country struggles with shipping delays, said Wilmar International Ltd. (WIL)
“We don’t carry excessive stocks of U.S. beans, which is more expensive,” Chief Executive Officer Kuok Khoon Hong said in a Feb. 22 interview, without giving figures. “Everybody is waiting for prices to fall,” he said, referring to processors in China. Wilmar is the country’s top cooking oil supplier.
Prices in Chicago slumped 19 percent from a record in September as the crop in Brazil headed for a record, surpassing the drought-hit U.S. harvest. Protests by dock workers and a record backlog at Brazil’s ports raised concerns over delays and prompted crushers to buy U.S. supplies last week. Canceled contracts beat purchases in the week to Feb. 14, turning total net sales negative in the five-day period for the first time since 2010, U.S. Department of Agriculture data show.
Deliveries of about 7 million metric tons are held up at ports in Brazil, pushing up prices in China, Kuok said in Singapore, where the company is based.
Futures on the Dalian Commodity Exchange fell 1.2 percent to close at 4,797 yuan ($770) a ton today after advancing to 4,918 yuan on Feb. 22, the highest level since Nov. 7. On the Chicago Board of Trade, the most-active contract climbed 0.3 percent to $14.48 a bushel, after a 2.1 percent advance last week. Prices reached an all-time high $17.89 a bushel on Sept. 4.
Dock workers in Brazil held up loading on Feb. 22 at the Port of Santos in a protest over job security as they consider a strike that would disrupt shipments of everything from sugar to soybeans and corn. The country’s ports have 192 ships waiting to load 10.8 million tons of commodities, compared with 90 ships waiting to load 4.1 million tons a year earlier, researcher SA Commodities said Feb. 22. The country is set to by the biggest exporter this year.
China bought 410,000 tons from the U.S., the USDA said Feb. 22. The purchases last week were driven by concerns over shipping disruptions in Brazil, researcher Shanghai JC Intelligence Co. said the same day.
Cancellations beat new purchases of U.S. beans, pulling total net sales for the current and next marketing year to minus 57,526 tons in the week to Feb. 14 from 235,818 tons a week earlier, USDA data show. That’s the first time sales were negative in a week since March 2010, according the data.
Waiting for Bottom
“Chinese buyers are just waiting to see what the bottom will be,” said Tetsu Emori, a Tokyo-based commodity fund manager at Astmax Investment Management Inc., referring to prices. The delay wouldn’t cut total imports, he said. “As soon as prices decline, the Chinese will come in to buy.”
Brazil shipped 23.9 million tons to China in calendar 2012, compared with almost 26 million tons delivered by the U.S., Chinese customs data showed. As of Feb. 14, about 1.76 million tons of U.S. beans sold to China remain to be shipped in the marketing year ending Aug. 31, down from 3.04 million tons a year earlier, USDA data show.
China’s imports are forecast to advance to 62 million tons in the year through September from 59.2 million tons in 2011- 2012, the Hamburg, Germany-based industry researcher Oil World said in a report last month.
Brazil’s harvest will surge 26 percent this year from 2011- 2012. The worst drought since the 1930s destroyed crops in the U.S., last year’s top producer and shipper. China’s share of global imports will reach 65 percent this year from 63.5 percent in 2011-2012, the USDA estimates.
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