China

Soya bean meal market - China

China is the biggest purchaser of soya beans from US, Brazil and Argentine but wish to control the price of this cargo increasing. The price of soya bean is the highest ever in 16 years.

The price of soya bean cargo will likely decline due to a weakening demand from domestic clients in China, increasing stocks and also the understanding amongst importers to reduce and reject further imports.

China's 16 largest soya bean meal importers agreed to delay and decline new imports during the second half of this year. China is demanding that the cargo is repriced using futures contracts on the Dalian Commodities Exchange rather than the Chicago Board of Trade.

Banks are also less willing to open letters of credit for the import of soya bean due to this situation and some vessels carrying this cargo are already being delayed in port.

Shipowners should be aware of the consequences of a collapse in the cost of soya bean meal which may lead to vessel's delay and prompt receivers to lodge spurious claims for cargo quality to reject the cargo or recoup from shipowners their commercial loss.