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Chick-News.com Poultry Industry News, Comments and more by Simon M. Shane

China Canceling Soybean Orders

11/28/2020

Importers of soybeans in China. are now negotiating cancellation of orders (“washing”) with U.S. suppliers with respect to consignments scheduled for December and January.  Soybeans increased in price during November as the rate of ordering rose, presumably to comply with the requirements of the Phase-One agreement signed in January.  Since China is the largest importer of soybeans in the World, accounting for more than 60 percent of shipments, they became a self-fulfilling prophecy driving up the price by their own activity. 

 

The increase in price of soybeans has sharply reduced the crushing margin in China by as much as 13 percent in November.  The basis (premium above futures price) has dropped 30 percent from $0.93 per bushel during the first week in November to $0.65 per bushel for the past week, suggesting a sharp decline in demand.  The cooling of purchases by China should be reflected in a corresponding decline in the CME price for soybeans.  On June 25th. 2020, soybeans traded on the CME at $8.63 per bushel ascending by 38 percent to $11.91 per bushel on November 24th.


 
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