Chinese buyers are back in the market for American soybeans after crushers in the Asian nation were granted a new round of tariff waivers, according to people familiar with the matter.
Soybean processors in China were granted permission to buy another 10 million metric tons of U.S. supplies without retaliatory duties, said the people, who asked not to be identified because the information is private. This would be a third round of waivers, with about 5 million tons granted previously.
On Tuesday, Chinese buyers were seeking cargoes for late this year and early next, the people said. The bids mark a return to the American market after Chinese buyers recently picked up cargoes in Brazil, where prices have been more attractive to Asian crushers already hurt by slower feed demand due to the spread of African swine fever.
Chicago soybean futures were buoyed by the news and hit the highest level in a week on Tuesday, rising to $9.59/bu. in intraday trading. China’s Ministry of Commerce didn’t immediately respond to a fax seeking comment outside of normal business hours.
President Donald Trump said China has indicated that negotiations over an initial trade deal are advancing, raising expectations that the two sides could sign an agreement at a meeting next month in Chile. A phase-one accord represents a pause in the 18-month trade war that has hurt the world’s largest economies.
“They have started the buying,” Trump said Monday during a Cabinet meeting at the White House, referring to Chinese purchases of U.S. agriculture products that the president has pushed for as part of a deal. “I want more.”
Waivers were issued to Chinese state-owned and private crushers as well as multinational processors based in the nation, the people said. While some traders remained optimistic about the sales, others pointed to lower prices in Brazil.
“China will buy where the cheapest price is,” said Joe Davis, a director at brokerage Futures International in Chicago. “They have plenty of time on the new tariff-free waivers so I would not expect it all at once in the U.S. with the market at the highest levels since mid-June. These private buyers will wait to see if prices fall.” Soybean futures in Chicago traded at $9.52/bu. on Wednesday, rising for a second day.