Like a bad airline peanuts joke, what’s with China and soybeans these days?
China’s soybean consumption has been interesting in 2018. At first, it was widely believed that China would have no other choice but to pay the tariffs to access the U.S. soybean market. Then, it was reported that China was turning to Brazil for its soybean needs, but the South American country could not keep up with the demand. Then, data found that shipments were still heading to China after the tariffs went into effect.
The relationship has been complicated.
Well, since Beijing and Washington agreed to a 90-day trade truce, China is showing some good faith and is buying U.S. soybeans again.
According to Reuters, Chinese state-owned businesses purchased approximately 500,000 tonnes of U.S. soybeans on Wednesday, the first big acquisition since Presidents Donald Trump and Xi Jinping met at the G20 summit in Argentina earlier this month.
From the newswire:
One trader knew of nine cargoes traded and said there were probably more. A second trader with direct knowledge of the deals said Chinese state-owned firms bought at least 12 cargoes for shipment between January and March.
“China was buying right out of the gate this morning. It looks like we’re back in business now,” the second trader said.
The soybeans are expected to be shipped from grain terminals in the U.S. Pacific Northwest, the most direct route to Asia, the traders said.
China is the largest buyer of U.S. soy, importing about 60 percent of all U.S. overseas shipments last year in deals valued at more than $12 billion. But the world’s top soybean importer has purchased little since Beijing slapped steep tariffs on U.S. shipments on July 6 in retaliation for duties on Chinese goods.
This is big news for the industry, especially as storage costs surged, inventories were rotting, and farms went bankrupt.
Soybean prices aren’t skyrocketing on the news, but March futures are up $0.37, or 0.4%, to $9.32 per bushel on the Chicago Board of Trade (CBoT) at the time of this writing.
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