China’s tariff waivers on US soybeans may weigh on palm oil demand
China buying more soybeans from Brazil (in orange) than the US (in blue)
China issued waivers in US soybean imports that allow up to 5mil tons without the extra tariffs, according to Bloomberg. If we assume the yield of producing soybean oil to be 18%, these additional purchases will add up to 900kt supplies of soybean oil to China’s vegetable oil market. Chinese firms have bought 1mil tons soybean from the US, with most of the cargos delivering this year (Bloomberg). China imported only 8.5mil tons US soybean from January to August (see chart above). China’s palm oil imports have stayed strong in recent months (see 25 September issue, page 1). Rising domestic soybean oil supplies may weigh on demand for palm oil imports. This is likely to pose a downside risk to our 12kt E.Malaysia/M.China freight forecasts.