Brazil May Take Away Big Share Of Soybean Trade From US

Brazil has, for long, retained the title of the world's largest exporter of soybean, followed by the U.S. Generally, the fourth quarter sees a lull in the South American country's export of the oilseed.

However, now, China--the top customer in the world soybean market--has turned to Brazil at a time when the U.S. exports are usually at its peak, reported Bloomberg.

Unidentified sources said that China was buying Brazilian soybeans to be delivered in October, which was generally the time for the U.S. exports to shine. The sources added more deals for the fourth quarter were expected to be done.

The reasons for Brazil outshining the U.S. are believed to be lower prices and a record crop this year.

Meanwhile, the U.S. crops, which generally get harvested starting in September, are facing problems due to hot and dry weather.

Also, Chinese processors find it profitable to crush Brazilian beans to make cooking oil and animal feed, according to Buenos Aires Times. Margins are negative for U.S. supplies, and so Chinese buyers are taking Brazilian goods earlier in the season.

Alphamar shipping agency said the purchases were ahead of the normal time, due to which five vessels were ready to gather cargoes in September in Brazil.

The agency's commercial director Arthur Neto said there were "huge stocks at farms now that will find their way to the ports over the next few months, so we will see more vessels on the lineup soon."

Tensions between the U.S. and China have also led to the Asian country to reduce its reliance on the former for supplies.

The latest sales also reflect Brazilian President Luiz Inacio Lula da Silva's efforts to strengthen ties with China as part of his growth plan for the Latin American country's economy.

Lula had visited China in April with hopes of bolstering economic ties between the countries, according to Al Jazeera.

At the time, he even said, "I will invite (Chinese President) Xi Jinping to Brazil for a bilateral meeting to show him projects for which we want to attract Chinese investment."

Lula's plan to make relations with China even stronger includes getting more funding from the Asian country. He also hopes China would help in reducing the role of the dollar in foreign trade transactions.