• Dow Jones reported that China and the USA have cancelled a formal review of phase 1 of the trade deal last Saturday. Experts said that fulfilling the agreement would be difficult but not impossible. China has only purchased US$8.7bil worth of US agricultural goods or 24% of this year’s purchase commitments in 1H2020. Also, China imported 45mil tonnes of soybeans in 1H2020, up 18% YoY. More than two-thirds of the soybeans came from Brazil due to their lower prices. However, as the US harvest season is around the corner, China may switch to US soybeans. China has booked about 10mil tonnes of US soybeans for shipments in the 2020E/2021F marketing year, starting 1 September 2020.

• In a related development, S&P Global Platts quoted sources as saying that soybean vessel arrivals in China are expected to rise in August from July as crushing demand gains pace. Most of the shipments are arriving from Brazil. About 158 vessels carrying 10.36mil tonnes of soybeans are expected to arrive in China in August, up from 147 vessels in July. In terms of volume, August arrivals will be 730,000 tonnes higher than July’s. Higher arrivals from Brazil were mainly driven by a weak Brazilian Real. China is now looking to cover its soybean demand for November and December 2020. Most of its shipments for September and October have already been covered.

• Reuters cited the Iowa Soybean Association as saying that a derecho (a wind storm), which took place a few weeks ago, has affected 37.7mil acres of farmland across the US Midwest, including 14mil in Iowa. The USDA said that the storm had affected 8.18mil acres of corn and 5.64mil acres of soybeans in Iowa. The Iowa Soybean Association added that the storm had affected 58,000 holders of crop insurance liabilities with a liability of around US$6bil in Iowa.

• MercoPress reported that Chinese importers are “washing out” Argentine soybean oil contracts. “Wash out” means previously signed contracts are cancelled and buyers can exchange them for sunflower oil produced in the Black Sea region, which is cheaper. The adoption of this strategy has led soybean oil prices in Argentina to fall to their lowest daily value in five months, reaching US$16/tonne on 12 August.

• Biofuels News cited the USDA and US Grains Council as saying that Southeast Asia (SEA) accounts for a third of USA’s exports of dried grains with solubles (DDGS) and the market share continues to grow. Some of the top 10 destinations are Vietnam, Thailand and Indonesia. SEA imported 3.07mil tonnes of DDGS from the US during the September 2019 to June 2020 period, slightly higher than the 2.95mil tonne recorded during the same period last year. DDGS are used mainly in feed meal industries

Source: AmInvest Research - 24 Aug 2020