US soybean exports drop as China shifts sources

Orders for nearly 1 million tons of US soybean exports were canceled in the past week, according to US government data released on Friday, as cheap supplies from Brazil and trade tension with China made US cargoes less attractive to buyers.

The US Department of Agriculture (USDA) said Friday that buyers from an undisclosed destination scrapped 949,000 tons of US soybean purchases. Of that total, 829,000 tons were for shipment before September, the largest one-time cancellation of soybean sales since December 2016, according to USDA data.

Cancellations are not uncommon during the US spring as buyers scrap unshipped US purchases and opt instead for newly harvested Brazilian soybeans, which are typically cheaper. But an unusually steep drop in Brazilian prices recently has accelerated the shift, traders said.

Brazilian prices fell sharply as a weaker currency brought a flood of soybeans to market, weakening prices in the export market.

“This was primarily a financial play resulting from very low Brazilian bean premiums relative to the US. But it also has the effect of totally protecting them against any risk of a soybean tariff if it were applied,” said Ken Morrison, a US trader who worked for Cargill and now publishes a commodity newsletter.

Brazilian shipments to China are currently about $15 to $20 per ton less expensive than US Gulf shipments. Those prices were about even as recently as late April.

A proposed 25-percent import tariff on US soybeans shipped to China would raise costs on US imports by about $100 per ton.