Bunge warns of "skinny" US exports, hopeful of Argentina soymeal sales

02.08.2018

US soybean exports will be markedly down in the next crop year and chunky exports currently seen in the corn markets could be reversed when Brazil restarts to sell on international markets, the CEO of agribusiness giant Bunge said Wednesday.

Referring to the ongoing trade spat between China and the US that has seen the former slap tariff on US soybean imports, Soren Schroder told investors that without a resolution Bunge's North American operations, which is more focussed on export markets than its competitors, could take a hit.

"If things remain as they are now, which is what we are assuming in our forecast, it's going to be a skinny export season both off the west coast and in New Orleans and we will not have a great fourth quarter there. We could end up having it in South America instead."

Brazilian bean prices in flat price terms have stayed stable while US prices have tumbled over the past few months after Chinese crushers boycotted buying US beans earlier this year.

And despite lower US soybean prices attracting fresh buyers, particularly from Europe, it won't be enough to stop a significant build in stocks, which the USDA estimated will reach a 12-year high next year.

"Of course there is some switches, there always is. Market prices are telling you that those who can should bring their business to the US."

"(But) the magnitude of the Chinese demand in a normal year is simply too big to replace," he said.

Schroder said he expected Chinese crushers to try and "stretch themselves to February or March" when Brazil soybean supply will return after the end of this year's crop disappears.

He added that there was some potential for soymeal exports from Argentina later this year, which Bunge could benefit from, although that was "still in the talking stages."

Schroder said good news could be seen in the recent spike of US corn exports, although that was "probably a matter of business that would normally would be supplied out of Brazil" and as Brazil still has some corn to export, it will "end up competing later in the year".

"The net of it all in a normal situation would be significantly reduced US net exports. At this point if you look at the net export figures, you may not see a big divergence, but that will be building unless something changes in trade between now and until we get until the middle of September."


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