Chinese importers have started to practice “wash out” with Argentine soy oil contracts, which is having an impact on the local industry.
Wash out, means previously signed contracts are being canceled, and buyers are choosing to exchange them for sunflower oil produced in the Black Sea region, which is cheaper. This practice has been adopted in the past by the Chinese with regard to soybean imports from Brazil.
The adoption of this strategy by the Chinese has led soybean oil prices in Argentina to fall to the lowest daily value in five months, reaching US$716 per ton FOB on August 12, according to the AgriCensus agency.
Less than two weeks ago, the price of Argentine soybean oil reached its highest value in seven months. “Argentine soybean oil prices fell due to reduced demand. India, last week, also canceled the purchase of 60,000 tons.
Instead, importers bought soy oil from Turkey, Russia, and Egypt,” said Anilkumar Bagani, head of research at the Mumbai-based vegetable oil broker Sunvin Group, whilst talking with
Agricensus. The Black Sea region is starting to harvest soybeans and the forecast is for an abundant harvest.