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China embarks on second round of soy buying

Reuters / Share:
US President Donald Trump with Xi Jinping. Reuters

CHICAGO (Reuters) – Chinese importers returned to the US soy market on Tuesday for their second round of purchases since the two countries agreed to a truce in their trade war, four traders with knowledge of the deals and the US Soybean Export Council said.

The purchases are the latest evidence that China is making good on pledges to buy US agricultural goods as part of the 90-day trade detente agreed to by US President Donald Trump and his Chinese counterpart, Xi Jinping.

The renewed buying lifted benchmark soybean futures prices Sv1 at the Chicago Board of Trade on Tuesday, although gains were tempered by the slower-than-anticipated pace of purchases by the world’s top soybean importer.

It was unclear how much China would buy. Last week, state-run companies booked more than 1.5 million tonnes of US soybeans for shipment from January to March, the country’s first major US soy purchases in six months.

One trader said Chinese state-owned companies bought 15 cargoes, or about 900,000 tonnes, on Tuesday for shipment from January to March, deals that would be worth more than $300 million.

A spokeswoman for the US Soybean Export Council confirmed the renewed buying, citing trade sources in China, but did not know the amount.

Soybean prices at US Pacific Northwest and Gulf Coast export terminals rose by 1.5 percent as the new wave of buying sent exporters scrambling for supplies shipped by rail or barge from the Midwest farm belt. Soybean futures on the Chicago Board of Trade gained about 0.3 percent.

The volume of sales since the Trump-Xi meeting on Dec 1 has been disappointing to traders who were expecting far larger purchases, which are needed to absorb a massive soybean stockpile bolstered by a record-large US harvest. Mr Trump told Reuters in an interview last week that China was buying a “tremendous amount” of soybeans.

The 25 percent tariff Beijing imposed on US soybeans in retaliation for duties Mr Trump put on Chinese goods remains in effect, limiting interest from private soy importers in China.

China last year imported 31.7 million tonnes of US soybeans, nearly 60 percent of US export shipments, in deals valued at $12.25 billion.

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