It’s bean awhile: Trade deal could hurt palm oil shipments to China
Blue bars show US soybean exports to China, orange bars represent Brazil soybean exports to China
The US and China signed the Phrase 1 trade deal, which will see the latter importing USD36.3 billion worth of US agricultural goods, including soybeans, in 2020, and another USD43.4 billion in 2021. (Platts) The trade dispute led to the collapse of US soybean shipments to China since 2018 (see blue bars in chart). Higher US soybean imports could support China’s domestic crushing activity, amid a recovery in the pig population following an African swine fever devastation. In addition, Brazil’s bumper harvest is now underway, which could ease soybean prices, supporting shipments to China. This is likely to boost the supply of soybean oil in China and weigh on palm oil imports, posing a downside risk to our 12kt E.Malaysia/China freight forecasts.