CHICAGO, Dec 22 (Reuters): China plans to make a third round of US soybean purchases within days, two sources familiar with the matter said on Thursday, after a trade war truce between Washington and Beijing this month triggered two waves of buying.
China bought US soybeans for the first time in six months after US President Donald Trump and his Chinese counterpart Xi Jinping met on Dec. 1 and set a 90-day negotiating window to resolve their trade differences.
More than 2.0 million tonnes of additional purchases are likely before the Christmas holiday on Dec. 25, according to one of the sources, bringing total US sales to China to more than 5.0 million tonnes in December.
Chinese importers bought only around 4.0 million tonnes of US soybeans last December, according to US Department of Agriculture data, but season-to-date sales coming into the month last year were 40 times greater at 20.6 million tonnes, compared to about 515,000 tonnes at the beginning of this month.
If China follows through on all the expected buying, total sales would still be less than a quarter of what they were in late December last year.
Soybean future prices have been falling as the purchases so far pale in comparison to the more than 31 million tonnes, or nearly 60 per cent of all US soybean exports, sold to China for $12.25 billion last year.
Traders are eyeing record US soybean stockpiles and the looming harvest of what is expected to be the largest-ever crop in top global exporter Brazil in coming weeks.
"The window is closing rapidly. Even if we get another 2.0 million tonnes by Christmas, it's peanuts in the big pot," said Terry Reilly, senior commodities analyst with Futures International.
Benchmark Chicago Board of Trade January soybean futures scaled to $9.28 a bushel, the highest since midsummer, after Reuters reported state-run Chinese companies had bought more than 1.5 million tonnes of US soybeans on Dec. 12. Prices have fallen more than 3 per cent since then, barely above levels before the Trump-Xi meeting.
In its weekly export sales report, the US Department of Agriculture on Thursday confirmed a net 1.561 million tonnes in US soybean sales to China last week. The agency, via its daily reporting system, cited private sales of another 1.403 million tonnes to China this week, along with 257,000 tonnes to undisclosed buyers, which are often Chinese importers.
China plans to buy more US soybeans
FE Team | Published: December 22, 2018 21:27:46
Lucas Richard of LFR Grain harvesting soybeans at a farm in Hickory, North Carolina — Reuters
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