Daily soybean export sales to China started showing up again in recent weeks, but why is China buying?
Earlier this week, USDA reported a soybean sale of 106,000 mt, or 3.89 million bushels, to China. Then, on Thursday, USDA reported a soybean sale of 120,000 mt, or 4.4 million bushels, to unknown destinations during the 2023/2024 marketing year.
When USDA reports a sale to an “unknown destination,” who’s actually buying? Dan Basse, president and founder of AgResource Company, says it depends.
“It’s not always China, it can be Europe, there can be a lot of things happening,” Basse says. “Of course, we have Europe coming on with new regulations in terms of deforestation areas, so we’ll see if that shifts business back to the U.S. Of course, all soybeans don’t have to worry about deforestation or forest issues under EU law. So there’s a lot of things happening internationally relative to China.”
Basse’s data shows the price of soybeans in the Pacific Northwest might be one factor bringing China to the U.S. for soybeans.
“I think the U.S. will have a little more runway,” Basse says. “I don’t disagree with USDA and their current 1.8 billion bushel soybean estimate for China, at least at this point. We’ll see what happens, but as the market steps back, it’s still all about weather in these declining crop numbers and how this all works into the mix long term.”
Arlan Suderman of StoneX Group thinks China is buying to build up their reserves.
“Our sources in China are telling us they’re buying U.S. cargoes right now to put in their reserves because Brazilian beans don’t qualify for the reserve program,” Suderman says. “They’re buying from us and they’ve also bought about 4.5 mmt tons of Argentine soybeans for shipment this summer for the reserve program as well. “
Suderman says if you look at bids, it shows Brazilian soybeans remain very competitive to U.S. soybeans all the way through September.
“I think that’s a longer-term concern, and China has bought very few U.S. soybeans yet for actual crush in the coming marketing year,” he adds.
