China this week put in a large order of Brazilian soybeans as it increasingly turns to the South American nation to fill a supply gap after halting purchases from the U.S., according to people familiar with the situation.
Chinese companies have already bought between 25 to 30 cargoes of soy from Brazil so far this week, which is equivalent to about 1.5 million to 2 million tons, the people said, asking not to be identified as the deals are private. Buyers are looking for more Brazilian supply and still haven’t bought enough to cover their needs through October, the people said.
China, which stopped purchasing American soybeans as the spat with the U.S. deepens, has turned to South America instead. While Brazil has so far been able to meet China’s demands, inventories are now dwindling and Beijing is at risk of not being able to fulfill its needs.
Adding to supply woes is Argentina, where farmers are withholding soy harvests to hedge against a depreciation in the currency because of elections there.
Chinese purchases of Brazilian beans last year surged after Beijing slapped 25% retaliatory tariffs on U.S. exports. While African swine fever this year is hurting soybean meal demand as the pig herds that feed on the commodity increasingly shrink, China still risks facing a shortage in supplies in the fourth quarter, one of the people said.
