Brazil Santos strike reports stoke soybean supply fears in China

Soybean prices in China and the US rose on Wednesday on reports of a possible strike at a key port in Brazil that handles the biggest volume of soybean exports.

Soybean futures on the Chicago Board of Trade rose nearly 1% in early dealing, while contracts on the Dalian for GMO beans rose 0.5% on reports that the Stevedores Union at the Port of Santos would down tools at lunchtime on Wednesday.

“There has already been a round of trading on this [information],” one soybean trader at an international crusher said, adding that their team is still verifying the validity of the information.

Internal memos sent by exporters and port operators and seen by Agricensus say that the Union could go on strike from March 18 for 14 days, but that grain shipments will not be impacted in the immediate future.

“In a statement released today, they said that the only exception would be to discharge medical supplies,” according to a note to clients from Brazilian port operator Orion Rodos.

“We received verbal information they will work from 0700 to 1300 tomorrow (Wednesday) and have another meeting tomorrow morning and disclose a final decision. As the grain elevators have use of their own shiploaders and staff, all grain exports are expected to continue normally, for now,” according to an internal memo at a major trading house.

Brazil is the world’s largest exporter of soybeans, and there are fears in China that if there is a broad directive to down tools due to social distancing policy, soybeans could spike.

Rumours in China suggest that some crushers are preparing to shut down some capacity on fears that the ports will suffer some disruption in the near future.

“It will depend on the national [soybean] reserve,” one China-based soymeal trader said, adding that the estimate of China’s total soybean reserve could be around 7-9 million mt – a figure that the Chinese government does not disclose.

In a sign of the logistics disruption the virus is causing, on Wednesday online retailer Amazon said it was suspending shipments to UK and US warehouses to prioritise medical equipment.