Poor Soy Crushing Margins in China to Improve

MarineLink.com
Friday, April 25, 2014
Photo courtesy Bunge Ltd

Poor soy crushing margins in China that have led the country to default on soy purchases are short term and should improve in two to three months, Bunge Ltd's chief executive officer said.

CEO Soren Schroder was in Brazil for the inauguration on Friday of Bunge's terminal in Barcarena in Para state on Brazil's northern coast, which cost 700 million reais ($314 million) to build and has a capacity of 4 million tonnes.

"Margins in China are bad for everyone," Schroder said at a dinner late on Thursday. But "it's a short-term problem," he added.

Schroder said the long-term trend is for China's soybean demand to increase, though he did not explain why he sees improvement for Chinese crushers in two or three months.

Chinese importers have canceled at least 500,000 tonnes of soybeans purchased from Brazil and the United States in recent weeks, according to Asian market sources, as buyers struggled to get credit amid losses in processing beans.

Weaker soy demand from China puts one of Brazil's main sources of trade income at risk at a time the South American country's economy is slowing. Brazil, the world's top soybean exporter, sends the vast majority of soy shipments to China.

Raul Padilla, who will take charge of Bunge's Brazilian operations next week, said China had not canceled any Brazilian soybean purchases from the company.

Bunge Brazil is not seeing any losses from the problem with China, said Padilla, who replaces Pedro Parente.

Bunge plans to ship its first soy cargo from Barcarena on Saturday, launching a short cut that will make Brazilian soy more competitive by relieving the overcrowded ports in the southeast.

Some 10 companies are expected to start exporting from the Barcarena region in the coming years. Parente said shipping soy by road and river barge north from Mato Grosso in central Brazil through the Amazon to Para state's coast would help Bunge gain market share in Brazil.

U.S.-based Bunge is already the top agricultural exporter in Brazil, the world's top sugar and coffee producer. With the Barcarena terminal, Bunge will have capacity to export 35 million tonnes of grains from Brazil per year.

Selling Cane MIlls

Bunge's outgoing Brazil CEO Parente, who until recently was also chairman of the board of Unica, Brazil's main sugar and ethanol lobby, said Bunge is in the process of selling its cane milling assets because they have failed to produce returns.

"The (cane) division has its own cash flow but it has not produced returns on its capital," said Parente, who was given the task at Unica of being the sugar and ethanol industry's lead negotiator with the government.

Most of Brazil's cane industry has been operating in the red over the past several quarters due to the weak price of sugar and government controls on fuel prices. Mills have been unable to generate sufficient margins to cover operating and financing costs.

Bunge operates eight mills in Brazil and is one of the country's leading producers of sugar and ethanol, crushing 20 million tonnes of cane a year.

"We have an obligation (to shareholders) to cover the cost of capital," he said.

Bunge first announced plans to seek buyers for its mills in November, only half a decade after making major investments into the sugar and ethanol sector. Bunge estimated the value of its milling assets at $2 billion to $2.5 billion in February.

($1 = 2.2277 reais)

(By Gustavo Bonato; Writing by Caroline Stauffer and Reese Ewing; Editing by Lisa Von Ahn and Jeffrey Benkoe)

Maritime Reporter July 2015 Digital Edition
FREE Maritime Reporter Subscription
Latest Maritime News    rss feeds

Environmental

Climate Change Boosts Galapagos Penguin Population

New study finds shifting winds and ocean currents helped double endangered Galapagos Penguin population   Shifts in trade winds and ocean currents powered a resurgence

Canada's First LNG Ferry Launches with Bestobell Valves

Bestobell Valves is celebrating supplying cryogenic valves to Canada’s first LNG-fuelled ferry – the MV Armand-Imbeau II, which has recently been launched.   It

Harper Government Invests in Naufrage Harbor

The Honorable Gail Shea, Minister of Fisheries and Oceans, announced today an investment to improve safety and working conditions for fishermen at Naufrage Harbor, Prince Edward Island.

News

Pentalver Opens London Container Facility

U.K. inland container service operator Pentalver opened a new five-acre site at the U.K.’s newest deep sea container port, DP World London Gateway, the London Port Authority announced.

USCG’s New Cutter Pulls into Boston

The U.S. Coast Guard’s (USCG) latest 418-foot National Security Cutter James (WSML 754) entered Boston Harbor August 3 ahead of her commissioning scheduled for August 8.

Egypt Says Finishes Work on New Suez Canal

Egypt has finished building its New Suez Canal, its overseer said on Wednesday, a project President Abdel Fattah al-Sisi sees as a symbol of national pride and

Government Update

Egypt Says Finishes Work on New Suez Canal

Egypt has finished building its New Suez Canal, its overseer said on Wednesday, a project President Abdel Fattah al-Sisi sees as a symbol of national pride and

ASEAN: China Shuns South China Sea Dialogue

Chinese Vice Foreign Minister Liu Zhenmin said on Monday the disputed South China Sea should not be discussed at a meeting of the Association of Southeast Asian Nations (ASEAN).

Contship Italia Signs Iran MoU

Contship Italia Spa, also on behalf of Eurogate GmbH & Co. KGaA, KG, recently signed a strategic Memorandum of Understanding (M.O.U.) with Sina Port & Marine Company (SPMCO),

Logistics

Pentalver Opens London Container Facility

U.K. inland container service operator Pentalver opened a new five-acre site at the U.K.’s newest deep sea container port, DP World London Gateway, the London Port Authority announced.

Egypt Says Finishes Work on New Suez Canal

Egypt has finished building its New Suez Canal, its overseer said on Wednesday, a project President Abdel Fattah al-Sisi sees as a symbol of national pride and

CMA CGM to Resume Service to Iran

The world's third-largest container shipping group, France's CMA CGM, said on Monday it would resume operations to Iran following the deal between Tehran and world

 
 
Maritime Careers / Shipboard Positions Maritime Standards Naval Architecture Navigation Pod Propulsion Port Authority Salvage Ship Electronics Ship Simulators Sonar
rss | archive | history | articles | privacy | contributors | top maritime news | about us | copyright | maritime magazines
maritime security news | shipbuilding news | maritime industry | shipping news | maritime reporting | workboats news | ship design | maritime business

Time taken: 0.1919 sec (5 req/sec)