Little Progress In China Soy Talks
Little progress has been made in talks between South American soy exporters and cash-strapped Chinese soy processors who are threatening to default on huge soybean purchases, U.S. grain traders told Reuters News Service on Friday.
They say the stalemate is likely to lead U.S. exporters to tighten up payment terms for future sales to Chinese processors.
"The buyers are in denial. They think they are going to get the money, while the sellers are confused on what to do," said one grain trader who returned this week from a business trip to China where he met some of the embattled soy processors.
"There are going to be some contractual changes after this ... big-time," said the trader, who declined to be identified.
Another exporter, whose company is involved in talks with some Chinese processors who want to renegotiate their purchases, said: "There's progress, but it's not positive."
Grain traders said exporters and processors were in talks to renegotiate prices and shipping terms on as many as 30 cargoes of soybeans purchased from South America, mostly Brazil, to prevent buyers from defaulting on the deals.
The Chinese soy crisis has apparently spread to the soyoil and palm oil markets also, with China now said to be trying to cancel or re-negotiate prices in those markets.
Traders and industry sources on Friday told Reuters there was talk of some defaults in the palm olein market. Up to three vessels of South American soyoil were also being diverted to India as Chinese buyers faced payment problems, they said.
They feared China would renege on more palm contracts on top of 150,000 to 250,000 metric tons already at risk.
Editors note: Richard Brock, The Corn and Soybean Digest's Marketing Editor, is president of Brock Associates, a farm market advisory firm, and publisher of The Brock Report.
To see more market perspectives, visit Brock's Web site at www.brockreport.com.