December US total soybean exports to China may exceed 5 mill

  • Dec, 26th 2018

According to Reuters, two people familiar with the matter said recently that China plans to conduct a third round of US soybean purchases within a few days. Earlier this month, the trade war between China and the United States was a truce, after which China procured two batches of US soybeans.

One source said that before the Christmas holiday on December 25, China may purchase more than 2 million tons of soybeans, making the total US soybean exports to China more than 5 million tons in December.

The leaders of China and the United States met on December 1 and the two sides decided to suspend the trade for 90 days. During this window, the two countries will negotiate to resolve trade disputes. Since then, China has resumed procurement six months after it stopped buying US soybeans.

However, US soybean futures prices have been falling recently, as China’s purchases so far have been negligible. The United States exported more than 31 million tons of soybeans to China last year, valued at $12.25 billion, accounting for nearly 60% of total US soybean exports.

Traders are paying close attention to record US soybean stocks, and Brazil, the world's largest soybean exporter, will begin harvesting in the coming weeks, and this year's harvest is expected to hit an all-time high.

"The armistice window will soon be closed. Even if we get another 2 million tons of orders before Christmas, it's just a drop in the bucket," said Terry Reilly, senior commodities analyst at Futures International.

After Reuters reported on December 12 that Chinese state-owned companies purchased more than 1.5 million tons of US soybeans, the Chicago Board of Trade (CBOT) January soybean futures rose to a high of $9.28 per bushel since the mid-summer period. Since then, soybean prices have fallen by more than 3%, only slightly higher than the level before the special study.

The US Department of Agriculture confirmed in its weekly export sales report on Thursday that the net sales of US soybeans to China last week was 1.561 million tons. The Ministry of Agriculture said through its daily reporting system that private exporters exported 1.403 million tons of soybeans to China this week, and another 257,000 tons were sold to undisclosed buyers, usually Chinese importers.

In addition, China Reserve Grain Management Group (China Grain Reserve) confirmed on Thursday that it has recently purchased several batches of soybeans from the United States, but did not provide detailed quantities.

These purchases are seen as a kind gesture of goodwill before the next round of Sino-US consultations. The United States has submitted a long list of complaints to China on intellectual property rights, compulsory technology transfer and industrial subsidies.

In July of this year, China imposed a 25% tariff on soybeans imported from the United States in response to US tariffs on Chinese products. At present, China and the United States are negotiating to resolve trade disputes by the deadline of March 2. During this period, this tariff has not been cancelled.

For China and the United States to hold economic and trade talks in January next year, China’s Ministry of Commerce spokesman Gao Feng said at the press conference today that there is indeed such a plan, the two teams maintain close communication and have detailed the relevant issues and arrangements. During the discussion, consultations including meetings and calls will be arranged at any time according to the progress of the consultation.