Tag Archives: Shipping

Brazil’s May soybean exports jump 33% in month

Ever since we wrote a paper about exporting soybeans, I’ve been following the contretemps between Brazil and the US regarding soybean exports. China is the largest importer of soybeans from these two countries. Since one is Northern and one is Southern Hemisphere, their harvest seasons differ. So in the past the prices switched back and forth as the harvest supplies soared in one country or another, and China bought around the same from each source. The US has areas where yields are large, is a bit closer, and the inland transport for the soybeans is good. Brazil has lots of land planted, overland transport to ports is challenged a bit, and the distance to China is greater.

But now we have ‘exogenous factors’ as the economists like to say. China is in a trade war with the US. So as the second article indicates, China’s government-owned processors are buying some American beans, whereas the private Chinese enterprises are buying more Brazilian beans. The result is that more beans are going to China from Brazil right now. The trade war’s uncertain vicissitudes may mean that Brazil’s sales will become significantly bigger, and China will only buy what it thinks it has to from the US. Geopolitically, it makes sense for China to support Brazil, a developing country with lots of financing needs and less influence in the world. Support might mean good opportunities for Chinese investment and influence on Brazil’s policies internationally.

The outlook is really unclear. We need to keep watching developments in soybean trade.

https://www.spglobal.com/platts/en/market-insights/latest-news/agriculture/052620-brazils-may-to-date-soybean-exports-jump-33-on-month-to-1224-mil-mt

https://www.spglobal.com/platts/en/market-insights/latest-news/agriculture/052520-china-buys-bulk-of-brazilian-soybeans-in-april-despite-us-china-trade-deal

Author Asim Anand

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Coronavirus delays create Container shortages in Chicago for DDGS

Coronavirus issues, particularly in China, are creating real problems for Dried Distiller Grains (DDGS) shipments. The lack of inbound containers from China means that there are not enough containers to ship DDGS out of the US.

DDGS is a byproduct of ethanol production, and in this part of the Midwest US, there is much ethanol production.  It is some of the most productive corn land in the US.  The DDGS are primarily used as animal feed.  China imports DDGS as feed for pork in the older times. I’m not sure how much they are importing right now due to the tariff fight and the pork disease issue in China. China’s pig production is just recovering from that tragedy a year or so ago.

The article gives an indication of container rates North Asia to West Coast US. They are trending down to attract business. blanked sailings are also a feature of the current environment in container shipping from China.

It’s a mess!

screenshot SandP Global Platts

via Container shortages in Chicago impact DDGS on coronavirus delays | S&P Global Platts

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Coronavirus sparks possible force majeure

 

Force majeure is a rarely invoked clause in many contracts. It frees all parties from obligations during the time of some major catastrophe beyond their control, such as war, strikes, riots, crimes, or so-called acts of God (earthquakes, hurricanes, volcanic eruptions, epidemics, and so on).  It seems that some Chinese shipyards and ports are applying for papers from The China Council for the Promotion of International Trade stipulating force majeure conditions.

This would potentially allow ocean carriers to cancel ship runs, lengthening supply chain transit times for cargoes.  There are already long delays. The extension of Chinese New Year to give more time to adjust to the Coronavirus outbreak also introduces delays.

It’s hard to say how such a clause would affect IMO2020 compliance. Shipyards will be closed, preventing scrubber installations, and so there will be long delays in fitting out ships with required scrubbers.  This may go on a lot longer than anyone thinks, since backlogs were already long on scrubber installations.  I doubt that IMO2020 rules on low-sulfur fuel use will be changed to accommodate force majeure, so carriers will simply have to do with fewer ships than they planned for. Shippers, their customers, will take the hit.

Splash-logo-Feb-Aug-e1519814055424    FEBRUARY 4TH, 2020 Jason Jiang JASON JIANG

via Coronavirus sparks force majeure conjecture – Splash 247