China buys cargo of US soybeans ahead of Trump-Xi meeting, sources say
China’s state-owned COFCO bought three cargoes of US soybeans, two trade sources said, the country’s first purchase of a US crop this year, shortly before leaders Donald Trump and Xi Jinping’s summit.
As the two countries battle trade tariffs, the lack of purchases from China has cost US farmers billions of dollars in lost sales, after they largely supported Trump in his campaign for president.
Although COFCO’s deal to ship about 180,000 metric tons of soybeans in December-January represents China’s first purchase in months, traders do not expect a significant return to demand for U.S. cargoes after recent heavy buying in South America.
COFCO did not immediately respond to a Reuters request for comment.
“COFCO has resumed purchasing American coffee beans even before the two leaders reached a trade deal,” said a trader at an international trading company that supplies Chinese crushers.
“The volume ordered by COFCO is not very large, currently only three cargoes.”
Benchmark soybean futures prices in Chicago this week surged to their highest level in 15 months, rebounding from a five-year low amid hopes of a US-China trade deal.
The main US soybean export season usually runs from October to January, but China avoided soybeans from the US fall harvest this year, amid a long-running trade dispute with Washington, and turned to South American suppliers.
Reuters was the first to report China’s purchase of the three cargoes.
LESS DEMAND
China, which imports more than 60% of the world’s soybeans, has nearly completed orders for cargoes from Brazil and Argentina through November, with limited purchases expected in December and January ahead of Brazil’s harvest.
“US suppliers have lost most of the oilseed crushing business,” said a second oilseed trader, who estimates China will need about 5 million tonnes shipped in December and January, as market conditions favor Brazil.
which traded at a deep discount to Brazilian cargoes in recent weeks due to weak Chinese demand, has rallied this week and is now priced at parity of about $2.45 a bushel over Chicago futures, traders said.
Chinese private buyers tend to prefer Brazilian soybeans because of their higher protein content, which typically commands higher prices than U.S. soybeans, said Jeffrey Xu, general manager of Shanghai-based OCI, a soybean consultant, and two other traders.
However, China could take about 8 million tons of US soybeans for its strategic reserves in the December to May period, traders said, buying through state-owned companies such as Sinograin, which is worth about $4 billion.
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Source: Reuters
