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China Plans More U.S. Soybean Purchases Soon

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December 13th, 2018

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.

 - By Alfred Cang at Bloomberg.



See Also: Corn Futures, Soybean Futures, Wheat Futures
Soybean futures, Corn, Wheat Tumble on Indications of Reduced Demand From Japan
By Jeff Wilson and Whitney McFerron - Mar 15, 2011

Soybean futures and corn tumbled the maximum allowed on the Chicago Board of Trade and wheat plunged the most in seven months on concern that the earthquake and nuclear crisis in Japan will reduce raw-material demand.

Equities in Japan had the biggest two-day drop since the 1987 crash as the risk of radiation leaks north of Tokyo escalated. U.S. Treasuries surged. Japan is the world’s leading buyer of corn, the third-largest importer of soybeans and the fifth-biggest purchaser of wheat.

“Increasing levels of radiation have people dumping positions in stocks and commodities and piling assets into cash,” said Alan Brugler, the president of Brugler Marketing & Management LLC in Omaha, Nebraska. “There’s increased risk aversion until the situation stabilizes in Japan.”

Corn futures for May delivery fell by the CBOT limit of 30 cents, or 4.5 percent, to close at $6.36 a bushel at 1:15 p.m., the lowest since Jan. 20.

Soybean futures for May delivery declined the 70-cent maximum, or 5.2 percent, to close at $12.70 a bushel, the lowest since Dec. 13.

Wheat futures for May delivery dropped 53 cents, or 7.4 percent, to close at $6.6775 a bushel in Chicago, the biggest decline since Aug. 6.

Oats fell the 20-cent maximum to a six-month low, while rice and soybean-oil futures also fell by the exchange limits in Chicago.

Shipments into Kashima and other ports on Japan’s east coast were stopped because of power outages after the 9.0- magnitude earthquake and tsunami, Zen-Noh, Japan’s largest corn buyer, said yesterday. Japan said today it plans to buy 32,381 metric tons of wheat in a tender on March 17, 76 percent less than it purchased last week.

Screen Imports

Asian countries moved to screen food imports from Japan following explosions at the Fukushima nuclear plant that raised radiation levels at the complex to harmful levels.

South Korea, Indonesia, Thailand, Malaysia, Singapore and the Philippines took steps to check fruit, vegetables, meat and seafood from Japan for nuclear material.

“It’s a fear-driven trade” focused on Japan, said Frank Cholly Sr., a senior strategist at Lind-Waldock, a broker in Chicago. “Demand is going to slow down, because even though they need to eat, they have more urgent things. They’ve got to stop the radiation leak, and they’ve got to find any survivors.”

Corn is the biggest U.S. crop, valued at $66.7 billion in 2010, followed by soybeans at $38.9 billion, government figures show. Wheat is the fourth-largest, behind hay, at $13 billion.

 - Jeff Wilson and Whitney McFerron in Chicago at Bloomberg.