TOKYO May 9 Marubeni Corp's exposure
to soybean cargo shipments not backed by letters of credit (LC)
is falling, the Japanese trading house's president said on
Friday, after Chinese buyers defaulted on as many as three of
its cargoes in recent months.
Chinese buyers have defaulted on at least 500,000 tonnes of
soybean shipments in recent weeks -- and are threatening to
default on more -- as buyers face tougher requirements to get
credit from banks and weaker local demand for soymeal.
Marubeni, the top seller of grains to China, saw as many as
three soybean cargoes defaulted on by Chinese buyers unable to
open LCs in late March and early April this year, President
Fumiya Kokubu said after a results briefing.
LCs are usually required by commodities sellers to guarantee
payments from buyers, but sellers sometimes relax the
requirement, particularly for established clients.
"We have about 20 late May, early June cargoes we're aiming
to sell to China that have already been loaded and now are
gradually having LCs opened on them ... so our exposure to
(shipments) that do not have a promptly opened LC is declining,"
The Tokyo-based company is the biggest soybean exporter to
China, shipping about 16 million tonnes a year along with
Gavilon, which it bought last year, or about a quarter of the
country's annual imports of 60 million tonnes.
Marubeni spent $3.6 billion to buy the grain trader Gavilion
last year in hopes of using the U.S. company to help procure
supplies for in China, already the world's largest food
consumer, where it expects demand to continue growing.
"Looking at China's overall soybean imports, while there
might be times when crushing margins become bad, over the
mid-to-long term its impossible for me to envision a decline in
demand," Kokubu added.
Marubeni expects to post 220 billion yen ($2.17 billion) in
net profit for the financial year ending in March 2015, slightly
below the 226.8 billion yen mean estimate of 13 analysts
surveyed by Thomson Reuters I/B/E/S.
Net profit for the 12 months ended on March 31 surged 62
percent to 210.9 billion yen, mainly due profit rises in its
energy and overseas sectors.
($1 = 101.6050 Japanese Yen)
(Reporting by James Topham; Editing by Ed Davies)