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Commodities

China resumes buying American soybeans amid current ceasefire in trade war

  • Chinese importers bought 1.5 million to 2 million metric tonnes of American soy over the past 24 hours, the US Soybean Export Council said, citing industry sources
PUBLISHED : Thursday, 13 December, 2018, 12:37pm
UPDATED : Thursday, 13 December, 2018, 2:17pm

The soybean market may have just gotten what it’s been waiting for: signs of larger purchases of US supplies from China.

Chinese importers have bought 1.5 million to 2 million metric tonnes of American soy over the past 24 hours, the US Soybean Export Council said, citing industry sources.

The shipments are expected to occur sometime during the first quarter, Jim Sutter, chief executive officer of the council, confirmed by phone and email. Most of the supplies will be shipped from terminals in the Pacific northwest.

The council “is encouraged by the news that buyers from China have made purchases of US soybeans,” the group said in an email. “This is obviously positive news for our growers.”

China is making its first significant purchase of US soy since the two countries began a series of tit-for-tat tariffs this year. Soybean futures had stayed relatively quiet in the last few days as traders awaited confirmation deals were happening after President Donald Trump hailed a breakthrough on agriculture as part of the trade truce agreed in his meeting with Chinese President Xi Jinping earlier this month.

It’s hard to overstate how important China is for the soybean world. It’s the biggest consumer by far, using the oilseed as a protein in livestock feed. Chinese tariffs on US shipments have turned usual trade flows on their head. Major exporters like Argentina have been buying dirt-cheap US supplies, while domestic premiums in soy king Brazil surged earlier this year.

As the tariffs ratcheted up between the countries this year, soybeans became the poster child of the trade dispute. China started shunning US supplies and Chicago futures tumbled as a result. Across the Midwest, the 2018 harvest had been piling up, unsold, in silos, bins and bags.

Still, the three-month nature of the purchase agreements may concern some traders. Cargill said earlier this month that the US has probably already missed the best chance to sell beans to China because of the approaching South American harvests.

The reports of the soy sales from the US came after Trump said in an Oval Office interview with Reuters this week that he’d heard China is “buying tremendous amounts of soybeans” from American suppliers, followed by news that China had agreed to make a “sizeable” purchases of soybeans from the US.

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