The CFR China price for Brazilian soybeans dropped 14% Wednesday from last Friday and hit a new low since mid-2018 on poor downstream demand for soybeans meal and weak crush margins, S&P Global Platts data showed.
Soybean demand was first hit last year due to the US-China trade war, and took another beating due to the African swine fever, triggering a downtrend in prices.
The CFR China price for Brazilian soybeans hit a new low this week at $367.44/mt on Wednesday, according to Platts assessments. It first dropped to $371.66/mt on Tuesday -- the lowest level since the start of the US-China trade war in July 2018, Platts data showed.
Market sources said Chinese demand for soybean imports was lower than expected this week, pushing prices lower.
Traders were betting on a spike in demand from Chinese crushers at the beginning of the Brazilian soybeans harvest in January and February. They are, however, in a hurry now to find homes for their cargoes.
"At this moment, some soybean traders have considerably long positions for February shipments on hand, and to protect their profitability some of them are [keen] to find buyers in the Chinese market," one of the traders said.
"The main reason why traders hold such sizable positions of early 2019 cargoes is due to previous market belief that Brazilian basis would stay high in 2019 as China placed a 25% tariff on US soybeans," the trader added.
Meanwhile, the African swine fever last year had dampened demand for soybeans, as soybeans meal is one of the staple foods for hogs. Around 1 million pigs were slaughtered last year, in an effort to stop the spread of the African swine fever.
With weak soybeans demand persisting in China, sellers are offering lower prices to attract customers.
