Trade War: China Buys US Soybeans After Fresh Round of Tariff Waivers, but Will it be the Last for Some Time?
Category: Grains
(South China Morning Post) – Chinese importers bought at least two cargoes of soybeans from the United States after receiving another round of tariff-free quota for shipments on Tuesday, traders in both countries said.
A US trader confirmed that two cargoes, or about 120,000 tonnes, were sold on Tuesday. A second U.S trader said four cargoes were sold, and a trader in China said at least six vessels, or more than 400,000 tonnes, were booked.
Market analysts and traders have questioned how Chinese purchases of US agricultural goods and related products, which peaked around US$29 billion in 2013, would hit the US target of US$40 billion to US$50 billion starting next year.
Duty-free quota was awarded for 10 to 15 vessels, or between 600,000 and 1,050,000 tonnes, said the two US traders, who asked not to be identified as they are not authorised to speak to the media.
Chinese crushers would need about 1 million tonnes of US soybeans before new-crop Brazilian beans are available, traders estimated.
“I don’t think there will be much more buying after this, as the market here does not need many US soybeans now,” said one trader with a Chinese importer that has booked Brazilian beans beyond mid-2020.
Soy crushing margins have thinned since last week’s trade deal news, the trader said.
US soybeans are competitively priced through mid-January while Brazilian shipments are competitive beyond that, according to a US soybean export trader. A second US trader said Brazilian soy prices only begin undercutting US prices from February onward.
Earlier this week, Tom Kehoe, an adviser to the US Department of Agriculture and the US trade representative, said Chinese buying of American farm products will be determined by how competitive they are, and not just by estimates laid out in an initial trade accord.
“These are businesspeople,” Kehoe said. “They are going to have to be in a competitive situation. Otherwise, they are not going to buy it.”