China Plans More U.S. Soybean Purchases Soon

China says more soybean purchases will happen soon. ( MGN Image )

(Bloomberg) -- China’s state stockpiler Sinograin and its top food company Cofco will buy more U.S. soybeans as soon as Thursday, according to people with direct knowledge of the plan.

The purchases may be made as soon as tonight in Asia, said the people, who asked not to be identified because the information is confidential.

The orders would be in addition to the 1.5 million to 2 million tons that the U.S. Soybean Export Council said China bought over the past 24 hours, a major gesture toward easing trade tensions between the world’s two biggest economies. On Thursday, the U.S. Department of Agriculture disclosed sales of 1.13 million tons of the oilseed for delivery to China.

Thursday’s potential purchases will continue through global trading houses, said the people, who declined to comment on the total volume as well as the amount that’s already been bought. Sinograin, known officially as China Grain Reserves Corp., and Cofco didn’t respond to requests for comment.

The purchases would be further confirmation that Xi Jinping’s administration is keeping its pledge to resolve trade tensions with the U.S. after agreeing on a truce earlier this month. The 25 percent tariffs imposed on American soybeans in June had decimated shipments to China, the world’s biggest commodities consumer and formerly America’s biggest buyer of the beans. That swelled U.S. inventories and forced the Asian nation to seek alternative supplies.

It’ll also provide some solace to U.S. farmers, who had been waiting for signs of progress after President Donald Trump’s said his Chinese counterpart Xi had agreed to resume American agricultural imports “immediately” when the two leaders met at the G20 meeting in Argentina less than two weeks ago.

Soybean futures in Chicago traded 0.1 percent lower on Thursday. While prices have recovered about 4.2 percent this month on optimism over the trade truce, they’re still down about 14 percent from this year’s high in March.

 

©2018 Bloomberg L.P.

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