BIMCO: Trade War Has Taken Its Toll on US Soya Bean Exports

first_imgThe trade war between U.S. and China has taken its toll on U.S. soya bean exports, which marked a 43 percent drop year-on-year during the first twelve weeks of the 2018/19 marketing year, which started in September 2018.Data from the world’s largest shipowner association BIMCO shows that the exports were down from 21 million tonnes by November 23, 2017 to 11.9 million tonnes by November 22, 2018. The drop is the equivalent of 122 Panamax (75,000 tonnes) or 183 Supramax (50,000 tonnes) loads.“Tonne mile demand is further hurt as not only are the volumes of US soya bean exports lower than last year, the distances sailed are also much shorter as the new destinations are closer to the US than China is,” Peter Sand, BIMCO’s Chief Shipping Analyst, says.The association believes the loss of 122 Panamax loads (all destinations) may be downplaying the impact the change in U.S. soya bean exporting patterns is having on the dry bulk shipping industry.By November 23, 2017, 71.3% of all soya bean exports were sent to China, equal to 200 Panamax loads on one of the longest trades in the world. So far this marketing year, China has taken just 2.8% of U.S. soya bean exports, further harming the tonne mile demand generated by US soya bean exports.“The weaknesses in Panamax and Supramax earnings in recent weeks is likely to be linked to the lower demand for seaborne transportation of U.S. soya bean exports as compared to previous seasons,” Sand added.In particular Panamax and Supramax vessels are affected given their reliance on the high volumes of U.S. soya beans usually being sent to China at this time of year.The drop in this demand has been one of the factors behind the lack of seasonal upswing in earnings which has been seen in previous fourth quarters, BIMCO said.Panamax earnings fell from 14,385 USD/day on October 17,  2018, to 10,996 USD/day on November 23, 2018.As informed, so far this season only two countries imported more than a million tonnes of U.S. soya beans: Argentina and Mexico.On the other hand, China seems to have replaced U.S. with exports from Brazil. Namely, even though U.S. exports to China have dropped by 98% since September 1, compared to the same period last season, total Chinese imports of soya beans in the period from January 2018 to October 2018, have only fallen 0.5%, largely due to increased imports from Brazil.However, BIMCO expects to see total Chinese soya bean imports to be lower than last year as the U.S. dominates the soya bean export market in the last quarter of the year.“Hopes of a resolution to the US-China trade war before the end of the year rest on the upcoming G20 summit, but even in the unlikely event that all tariffs are immediately revoked, the trade war may have a long-term effect on trade between the two nations.“As evidenced by China halting imports of US crude oil despite it not being an official part of the trade war, tariffs are not the only factor which have and most likely will continue to harm trade between the two nations.“If Chinese farmers decide they need fewer soya beans to feed their livestock, the overall Chinese demand for soya beans could be permanently reduced, even if tariffs are removed,” Sand concluded.last_img

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