Argentina’s decision to eliminate export taxes on grains and oilseeds on Monday, Chinese buyers have placed orders for at least 10 shipments of Argentine soybeans.
Informed sources revealed that the purchased soybeans will be shipped via Panamax vessels, with each vessel carrying approximately 65,000 tons. The shipments are scheduled for November, with the cost-and-freight (CNF) price trading at a premium of $2.15 to $2.30 per bushel over the November soybean contract on the Chicago Board of Trade (CBOT). One source further indicated that Chinese buyers have already secured a total of 15 shipments of Argentine soybeans.
Argentina’s temporary tax removal has significantly enhanced its export competitiveness, prompting Chinese buyers to procure soybeans for fourth-quarter shipment. Argentina typically imposes a 26% export tax on soybeans.
At this time of year, China usually focuses on purchasing newly harvested U.S. soybeans. However, this year’s situation is different. Due to ongoing Sino-U.S. trade tensions, China has not yet purchased a single shipment of new-crop U.S. soybeans for autumn delivery.
Traders and analysts noted that China’s large-scale purchase of Argentine soybeans represents a fresh blow to U.S. farmers. As the U.S. soybean harvest is just beginning, the shift of its top buyer to South American suppliers means American farmers have already missed out on billions of dollars in soybean sales to China midway through the peak export season.
The transactions, concluded shortly after Argentina’s tax exemption decision, clearly indicate that China currently does not rely on U.S. soybean supplies.
Earlier this month, reports indicated that China had largely completed soybean purchases for October shipment and had booked about 15% of its November requirements, all sourced from South America. In previous years, China would typically purchase 12 to 13 million tons of U.S. soybeans during September to November.
The Argentine government stated that the temporary tax relief will remain in effect until October or until the total tax exemption amount reaches $7 billion. The news led to a decline in Chicago soybean and soybean product futures, with Dalian soybean meal futures also falling on Tuesday. However, analysts believe the impact of Argentina’s tax policy may be short-lived, as the measure is valid for only slightly over a month, and Argentina’s overall soybean supply remains limited.
From May to August, China’s soybean imports reached a record high for the period, as oil processors sought to build inventories to avoid potential supply disruptions in the fourth quarter. Analysts suggest that key factors to watch going forward will be the actual volume of Argentine soybean purchases and arrivals, as well as the progress of Sino-U.S. trade negotiations and their impact on soybean imports in the fourth quarter and early next year.
