CORRECTED: Marubeni 'to sell' soybean trading unit in China

Japanese commodities conglomerate Marubeni is to sell its soybean trading operation in China by March 2020, the company’s Beijing-based manager of the unit said on Thursday, confirming market rumours.

According to the speculation that swirled around the country’s soybean market, Marubeni's soybean trading subsidiary - US-based Columbia Grain International - will be sold by 2020.

The rumours were confirmed by a manager at Marubeni's China arm.

Agricensus approached both Marubeni and Portland-based Columbia Grain International for comment, but had received no reply at time of publication.

Traders said they have heard that Marubeni's sales to China will be gradually halted as the company seeks an exit against the backdrop of weakening profits for soybean trading houses because of the US-China trade war.

"I’ve heard Marubeni will stop giving [soybean] offers today and close its soybean segment by March next year," a soybean trader told Agricensus.

The company's Tokyo headquarters could not be reached for comments by time of publication.

Marubeni has been a major exporter of soybeans to China selling between 8 million mt (m mt) and 15 m mt to China per year, with the upper end of that range corresponding to around 16.5% of China's annual import volume. 

"It seemed like their trading business was not going smoothly," according to one China-based analyst at a major crusher.

A trade war between the US and China broke out in April 2018, prompting major uncertainty in global soybean fundamentals after China slapped additional tariffs of 25% on US soybean imports in July last year.

Soybean demand has also been eroded by falling demand for animal feed in the wake of the African swine fever epidemic, which has spread to all parts of China since August 2018.

US-based grain marketing company Gavilon, purchased by Marubeni in 2012, was said to be unaffected by the potential sale of the soybean trading business.

Note: This article has been corrected after it initially identified Columbia Grains as the company buying the Marubeni soybean entity. In fact, Columbia Grains is the arm that Marubeni is looking to sell by March 2020. Agricensus apologises for any confusion the original article caused.