Three Chinese companies have defaulted on at least 500,000 tons of U.S. and Brazilian soybean cargoes worth approximately $300 million after being unable to open letters of credit with banks. There are currently 5-6 Panamax cargoes unable to be unloaded at ports and an additional 5-6 cargoes out to sea without letters of credit obtained. Facing a cooling economy, and signs that authorities will not step in as readily when loans go bad, Chinese banks are becoming more selective about who they lend to. China imports 60% of the soybeans traded globally and defaults by Chinese buyers will likely cap a rally on global prices as the world is reliant on China to support price strength.
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