Soymeal futures at 2-mth low

Rising freight rates dampen Chinese buying interest: traders

The buying interest of grain and soybean cargoes from China quietened significantly this week after dry bulk ocean freight rates spiked since last week, pushing import costs sharply higher, according to several trade sources.

Several Chinese buyers pulled back their bids for corn, barley, sorghum, and soybean cargoes this week as offers jumped against the backdrop of rising freight costs.

According to traders, freight rates for spot shipments of major routes such as Brazil to China, US Gulf to China, and France to China all spiked USD 5-6 per ton over the past week as Baltic index surged.

Spot rates for Santos in Brazil to China, one of the most important trade route for China’s soybean imports, rose from USD 33 per ton last week to around 42 USD per ton this week.

Higher freight costs means that the CNF import prices for Chinese buyers are up despite FOB prices at origin being relatively stable in the past week.

Chinese importers were heard snapping up nearly 20 soybean cargoes last week and the majority of which were booked out of Brazil. But they have stayed largely quiet this week due to rising prices.

It goes the same for corn and barley purchases from China which have also slowed this week.

Even though FOB prices at origin market slid due to weaker grain futures, rising freight costs largely offset the impact and kept offers stable.

Freight costs bounced higher this week due to a combination of improved expectations on China’s growth in 2023 and the mining incident in Inner Mongolia which forces coal importers to ramp up purchases from aboard, according to trade sources.

Soymeal futures fall to 2-mth low amid poor demand

Futures for soybean meal in China continued to slide on Thursday against the backdrop of weak demand in the cash market and a wider bearish tone across the international market.

The main soybean meal contract on Dalian Commodity Exchange touched the lowest level since late December last year, after falling for four consecutive sessions.

Corn futures on the Dalian exchange and rapeseed meal futures on Zhengzhou Commodity Exchange both softened in accordance with soybean meal futures.

Oilseed futures in China also traded lower, in response to the boarder selloff of grain futures internationally.

On a macro level, the dollar weakened sharply against the Chinese renminbi this week down from 6.95 yuan per dollar on Monday to 6.86 yuan per dollar on Thursday, which lowers the cost of imports for Chinese buyers.

Futures close