China cancels more Soybean orders!

[fjlip]

Canola on Tuesday was caught in the downdraft of soybean’s decline, triggered when USDA announced cancellations of sales of U.S. soy to China and to an unknown destination.

One cancellation was for 300,000 tonnes of shipments to China and another 120,000 tonnes sold to unknown destinations. U.S. soybean exports have been running well ahead of expectations so far this crop year.

January soybeans fell more than two percent but January canola fell only about one percent.

[SASKFARMER3]

Yep their a great player!~

[agstar77]

Nothing major happening till the S.A. Crop comes in. China just pulling our chain to get existing supplies cheaper.

[BTO_farmall]

Word is Chine cancelled The Order, Cause couldn't source the 300,000 MTa Beans, Ain't None Around, Lock The F#ckin Bins Boys!!!!!!!!!!!!!!!!

[bucket]

Do you think they were cancelled or re-routed and being repriced from a different port?

[Rareearth]

Not sure if I understand the mechanics.
Do they reroute, optional origin contract?

If outright cancelled how could any exporter
operate when they are contracting with growers,
booking trains, barges, trucking etc filling export
facilities to be ready for the ships enroute. Must
be some big buy out clauses, or penalties? It
seems to happen all the time.

When the rail ways don't spot cars at the inland
grain terminals sure plays with cash-flow and
scheduling. No one knows when or if it will be
spotted. I know I'm not compensated, and I doubt
the terminals are either. Wonder if the exporter of
record would be? Plays hell with the markets for
sure .

[charliep]

Could be a number of things. The first thing is the customer country doesn't have to be reported initially. Not sure how long this has to occur before vessel arrival. The second is you need more details than is provided here. Quite often the contracts can be rolled (sometimes with agreement of the buyer and the seller). For example, the buyer decided they don't need delivery for that period. The seller may also want to defer the delivery because they are struggling to get the soybeans into position.

Sometimes the business is also done optional origin. The intermediary has bought with the idea of taking US soybeans and some reason decides to switch to South American. Their business/commitment to a buyer so they can do it.

Every year this happens. You need a lot more information than is provided in a two sentence quote in a market newletter written by a writer with a deadline/not much more analysis.

[HappyFarmer]

The costs assosiated with overseas buyers in these cases are a lot less costly to grain companies than most may think Rare Earth and charlie. I first hand have been involved in some of these.
Remember, overseas buyers are purchasing beans, corn, canola, etc on a basis contract just like you sell your canola to the elevator. Hedging futures properly takes a lot of risk and cost associtated with cancelling bean contracts. (al be it trust me, nothing in life is free and there are some costs). Ultimatley MOST contracts (2008 was a DISASTER) are re-negoitated at different prices and executed on the same tonnes.

The people who are ulitmaly hurt by this the most though are farmers because of the reaction of the futures market.

[charliep]

It also works the other way when someone shorts the market and then struggles to find supplies. I hope I remember history well (more difficult in advancing years) but that is what got the wheat going in 2007 - crop problems in Russia/Ukraine, sales on the books and no crop in shipable position. I suspect what many are hoping for in the next 6 months.

[HappyFarmer]

Yes It can but these are different circumstances.
This about cancelling sales not being short for
them, yet! And god help us that no one is short
beans.
The amount of risk grain companies take has
changed immensely since 2008.

[charliep]

Amen. The world of living with tighter carryovers expectations is feast or famine. Volatility and risk management are the name of the game.

[Rareearth]

I wish I could cancell without repercussion
contracts when the markets goes against me , or
for, depending on pricing situation.

If the international buyers are buying on a basis
are they still committed to take delivery in the
future? Again if the system is full, and the gorilla
doesn't want it, then what?

Is there a time limit on the so called cancelation
time period? If the system is full, not many other
gorilla out there feeding on beans( talking about
china). The exporter could be blocked from doing
other business (there a car gill type conspiracy
theory in the making, especially if they were to
"collude" with the buyer, creating hardship forbthe
competition )or forced to ship and discount, travel
to pick up the check with a souvenir t shirt, or
what else could happen?

[HappyFarmer]

Your right Rareearth. The is unbelievable that.
People can just walk on this stuff. I've said it
before and I'll say it again, a lot of overseas
buyers do not operate like farmer do on contracts.
But unfortunately it's a reality.

In most of these cases, these cancellations are
done well in advance of them being shipped ( the
last round cancelled in mid nov was for jan
shipment and I hear this last 420 k tonnes was for
feb) vs the shipp being loaded with it no where to
go. So technically yes, that "basis" contract is in
most cases renotiated and shipped. Most being
the key word. This year iI would say most will be
renegotiated with the problems on the Mississippi
and striking workers on the west coast, not to
mention a short supply of beans. Also this year
not a problem having a full system so no worries
in that regard.

If is not shipped, can be sold to another exporter,
importer, etc. lots of other people to deal with in
the world.

Most farmers would be shocked to see how
people in the world try to operate.

Hope this makes the mud a little clearer.