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Decreased soybean imports may buoy palm oil freights to China in Q4

08 August 2019

China could not boost Brazil winter soybean shipments (in orange) last year even when US shipments (in blue) stopped.

China plans to remove soybean, rapeseed and palm oils from its import tariff quota scheme. China is the world’s biggest soybean importer, but has halted purchases from the US as a result of the collapse in trade talks (Reuters). Shortages of soybean for crushing may result during winter months, increasing demand for imported vegoils. The harvest season of Argentina and Brazil starts in March, while growing season begins after September. During the autumn and winter season, China used to import US soybeans. However, after the 25% tariff was imposed on US beans in July 2018, soybean shipments to China fell in the autumn to winter period (see chart above). It appears there was a shortfall in beans over the winter because of the missing US shipments. This is in line with Eastport Research & Strategy’s forecasts (see page 13 of our 2018 Palm Oil Shipping 2-Year Outlook, and VTFB – 29 August 2018 issue). Decreased soybean inflows may support E.Malaysia/China palm oil freights in Q4. 

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