China Makes Second Purchase of US Soybeans Since Trade-War Truce, USDA Confirms

December 19, 2018 Updated: December 19, 2018

CHICAGO—Chinese importers returned to the U.S. soy market on Dec. 18 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 U.S. Soybean Export Council said.

Private exporters sold about 1.3 million tons of U.S. soybeans for shipment to China, the U.S. Agriculture Department said Dec. 19.

The sales come after U.S. President Donald Trump and Chinese leader Xi Jinping agreed to a 90-day trade-war truce to negotiate a deal after meeting at the Group of 20 summit in Buenos Aires earlier this month.

The total sales to China since the meeting haven’t yet met expectations of grain traders and U.S. farmers, who are holding massive stockpiles of the oilseed following a record large harvest this autumn.

Chicago Board of Trade soybean futures gyrated on both sides of previous levels Dec. 19 as the market weighed prospects for further sales to China ahead of the early March deadline for securing a trade deal.

Soybean prices at U.S. 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.

“This confirmation takes us up to about 3 million tons,” Terry Linn, an analyst with Linn & Associates in Chicago, said of the total sales since the trade-war truce.

“Is this big enough to further upside in soybeans? Not in my opinion … The expectation coming out the Argentina meeting was 10 [million] to 12 million tons,” Linn said.

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

China last year imported about 35 million tons of U.S. soybeans, almost 60 percent of U.S. export shipments, in deals valued at $12.25 billion.

The renewed buying lifted benchmark soybean futures prices at the Chicago Board of Trade on Dec. 18, 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 1.6 million tons of U.S. soybeans for shipment from January to March, the country’s first major U.S. soy purchases in six months.

One trader said Chinese state-owned companies bought 15 cargos on Dec. 18 for shipment from January to March, deals that would be worth more than $300 million.

Trump on Dec. 17 said he authorized a second round of payments from an aid package of up to $12 billion, to help farmers suffering from the 90-percent plunge in Chinese demand for U.S. soy.

The purchases in recent days won’t do much to benefit farmers, but they do provide a goodwill gesture before the next round of U.S.-China talks to change terms of trade. The United States has a long list of complaints against China regarding intellectual property, forced technology transfers, and industrial subsidies.