China buys US soybean cargoes ahead of Trump-Xi meet: sources
As the two nations battle over trade tariffs, the lack of Chinese buying has cost US farmers billions of dollars in lost sales, after they largely supported Trump in his campaigns for president
Highlights:
- COFCO bought 180,000 tons of US beans for Dec/Jan shipment
- China's first purchases of US soybeans from autumn harvest
China's state-owned COFCO bought three US soybean cargoes, two trade sources said, the country's first purchases from this year's US harvest, shortly before a summit of leaders Donald Trump and Xi Jinping.
As the two nations battle over trade tariffs, the lack of Chinese buying has cost US farmers billions of dollars in lost sales, after they largely supported Trump in his campaigns for president.
Keep updated, follow The Business Standard's Google news channel
Although COFCO's deal for December-January shipment of about 180,000 metric tons of soybeans was China's first such buy in months, traders do not expect a significant resumption in demand for US cargoes after recent large South American purchases.
COFCO did not immediately respond to a Reuters request for comment.
"COFCO has proceeded to purchase US beans even before the two leaders have reached a trade agreement," said a trader at an international trading company that supplies Chinese crushers.
"The volumes booked by COFCO are not that large, three cargoes for now."
Benchmark Chicago soybean futures prices jumped this week to their highest in 15 months, rebounding from recent five-year lows on hopes for a US-China trade deal.
The prime US soybean export season normally runs from October through January, but China has shunned soybeans from the autumn US harvest this year, amid protracted trade friction with Washington, turning instead to South American suppliers.
Reuters was the first to report China's purchase of three cargoes.
LACKLUSTRE DEMAND
China, which takes more than 60% of world soybean imports, has nearly completed booking cargoes from Brazil and Argentina through November, with limited purchases expected for December and January ahead of the Brazilian harvest.
"US suppliers have missed out on most of oilseed crushing business," said a second oilseed trader, who expected China to need about 5 million tons of shipments in December and January, for which market conditions favour Brazil.
US soybeans, which traded at a steep discount to Brazilian cargoes in recent weeks due to subdued Chinese demand, have strengthened this week and are now priced at parity at about $2.45 per bushel above Chicago futures, traders said.
Private Chinese buyers tend to prefer Brazilian soybeans for their higher protein content, which typically brings a premium over US soybeans, said Jeffrey Xu, general manager of Shanghai-based OCI, a soybean consultant and two other traders.
Still, China could take about 8 million tons of US soybeans for its strategic reserves in the period from December to May, traders said, buying through state-owned enterprises such as Sinograin, which would be worth roughly $4 billion.
