More Canadian soybeans are finding their way into the Chinese market as US origin soybeans become uncompetitive after the 25% import duty was imposed from July 2018.
About ten vessels of soybeans have been sold to China, on a CFR basis, in August at prices ranging from 270 to 280 cents/bushel over November CBOT Futures contact, traders said. These are around 40 cents/bu cheaper than soybeans of Brazilian origin on CFR basis.
Canada exports a total of 5.5 million mt of soybeans annually according to USDA, with about 45% of these going into China in the 2017/18 marketing year. However, in 2018/19 traders expect this share to increase to 80%. The biggest issue with the increase in exports remains the railway logistic bottleneck.
“Canada will have to decrease their exports in other products if they are to export more soybeans into China.” an Asia-based trader said.
In addition, Canadian supplies are a drop in the bucket compared with China’s total import demand, which is projected at 95 million mt, according to USDA’s July WASDE report.
China will face difficulties finding non-US supplies of soybeans arriving in Q1 2019, as Southern hemisphere exports dry out due to the inter-crop period. Traders are anticipating an uptick in imports from alternative origins such as Canada and the Black Sea, but also in other meals such as rapeseed meal and sunflower seed meal to compensate for the decrease in soybean imports.