📊 Q3 Earnings are here! Plan ahead with key data on upcoming stock reports - all in 1 placeSee list

Exclusive: China to inspect Argentine crushers, could unlock No. 1 soymeal market

Published 07/30/2019, 11:52 AM
Updated 07/30/2019, 11:56 AM
Exclusive: China to inspect Argentine crushers, could unlock No. 1 soymeal market
BG
-
MOLAm
-
CARG
-

By Hugh Bronstein

BUENOS AIRES (Reuters) - A Chinese delegation is set to visit Argentina in August to inspect soymeal crushing plants, Argentine government and industry officials told Reuters, a key step as the South American country looks to open up exports of processed soy to the world's No. 1 consumer.

Argentina, the top global soymeal exporter, has tried for years to break into the China market, the biggest consumer of the meal which it uses to feed its giant hog herd. China, with its own crushing industry to protect, has steadfastly resisted.

Global trade uncertainties - including pessimism about U.S.-China negotiations that start on Tuesday in Shanghai - has, however, strengthened Argentina's hand, grain traders said, prompting China to expand its soymeal import options.

"We will have a visit of Chinese officials as part of the process of pursuing the objective of exporting soybean meal to China," Santiago del Solar, chief of staff to Argentina's Agriculture Secretary, told Reuters.

China is the No. 1 buyer of Argentine soybeans but does not import any of its processed meal, which could be used to help feed the world's biggest hog heard as consumers in the country shift toward a diet of meal-fed pork and poultry.

"Argentina has spent 20 years trying to gain access to the Chinese soymeal market. In all that time, this is the first Chinese trade mission to Argentina specifically to discuss soymeal," Gustavo Idigoras, president of Argentina's CIARA-CEC chamber of grains exporting companies, said in an interview.

He added Chinese customs inspectors would arrive on Aug. 18 for a two-week trip and visit crushing plants operated by eight firms including Bunge Ltd (N:BG), Vicentin, Molinos Agro SA (BA:MOLA), Louis Dreyfus Corp [LOUDR.UL], Cargill Inc (CARG.UL).

"It makes sense for the world's biggest and most efficient soymeal exporter to sell to the world's biggest consumer."

The firms did not immediately respond or declined to comment.

The meal manufactured in the giant crushing plants that dot the banks of Argentina's Parana River, clustered around the country's main grains hub of Rosario, is exported mostly to Southeast Asia, Europe and Northern Africa. China imports only small amounts of soymeal currently, none of it from Argentina.

(GRAPHIC - Argentina soy png: https://tmsnrt.rs/2MzR1pp)

TRADE WAR SILVER LINING

The mission comes at a time when U.S. exporters are facing troubles getting farm goods approved by China due to the trade war raging between Washington and Beijing, which traders said may favor Argentina.

"This is a troubled time for the U.S.-China trade relationship. Maybe that's an opportunity for Argentina, specifically regarding value-added products like soymeal," said an executive at one of the Argentine crushing plants slated to be inspected. He asked not to be named.

U.S. President Donald Trump on Tuesday slammed what he called a "ripoff" trade deal with the Chinese, and warned the world's No. 2 economy against waiting out his first term in office to finalize any new deal.

"I think this time, China really feels the crisis and wants to guarantee (soymeal) supplies," said a Beijing-based grains trader on condition of anonymity. Another China trader said the impact would be less immediate, but was more a "back-up plan" for China given the trade dispute.

To be sure, China will remain overall much more focused on Argentine soybeans than meal. Chinese buyers currently buy over 70% of Argentina's total exports of raw beans.

Idigoras said he was confident that China would soon open the door to Argentine soymeal, as a massive dietary shift away from rice and toward protein in the Asian country increased demand for livestock feed.

He added it would likely take over six months following the mission for any exports, during which time inspectors would have to prepare a report from the trip regarding approvals and soymeal from each plant would have to be registered in China.

He estimated a first cargo would be around 35,000 tonnes.

"In March the Chinese vice minister of food security told me that the only questions remaining about Argentine soymeal were of price and quality," Idigoras said. "We offer the best of both, so we are very confident the mission will be a success."

Latest comments

Risk Disclosure: Trading in financial instruments and/or cryptocurrencies involves high risks including the risk of losing some, or all, of your investment amount, and may not be suitable for all investors. Prices of cryptocurrencies are extremely volatile and may be affected by external factors such as financial, regulatory or political events. Trading on margin increases the financial risks.
Before deciding to trade in financial instrument or cryptocurrencies you should be fully informed of the risks and costs associated with trading the financial markets, carefully consider your investment objectives, level of experience, and risk appetite, and seek professional advice where needed.
Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. The data and prices on the website are not necessarily provided by any market or exchange, but may be provided by market makers, and so prices may not be accurate and may differ from the actual price at any given market, meaning prices are indicative and not appropriate for trading purposes. Fusion Media and any provider of the data contained in this website will not accept liability for any loss or damage as a result of your trading, or your reliance on the information contained within this website.
It is prohibited to use, store, reproduce, display, modify, transmit or distribute the data contained in this website without the explicit prior written permission of Fusion Media and/or the data provider. All intellectual property rights are reserved by the providers and/or the exchange providing the data contained in this website.
Fusion Media may be compensated by the advertisers that appear on the website, based on your interaction with the advertisements or advertisers.
© 2007-2024 - Fusion Media Limited. All Rights Reserved.