More Soybeans Headed to China as Trade Talks Planned

January 3, 2019 07:15 AM
China is back in the market for U.S. soybeans after taking a holiday break as Washington and Beijing plan more trade discussions.

(Bloomberg) -- China is back in the market for U.S. soybeans after taking a holiday break as Washington and Beijing plan more trade discussions.

On Wednesday, Cofco Corp., China’s biggest food company, was asking for prices, according to four traders familiar with the process, who asked not to be identified because talks are private. The inquiries were for February and March delivery, three of the traders said. While there’s market talk that some purchases have been concluded, both Cofco and state stockpiler Sinograin declined to comment.

The renewed interest comes as trade officials from the two countries are scheduled to sit down in Beijing next week for the first face-to-face negotiation since President Donald Trump and his counterpart Xi Jinping agreed to a 90-day truce to their trade war last month. The prospect of more buying sent futures in Chicago up 1.3 percent on Wednesday.

“It was a good start to 2019 for the beans,” Charlie Sernatinger, global head of grain futures for ED&F Man Capital Markets Inc. in Chicago, said in an emailed report. “Shorts covered off of talk that China was coming back in to buy U.S. cargoes and forecasts for Brazil went drier.”

China last made a big purchase of soybeans before Christmas, scooping up about 1.2 million metric tons for delivery by Aug. 31, according to the U.S. Department of Agriculture. That was on top of 1.56 million tons in the week ended Dec. 13. Cofco said it made two purchases, while Sinograin said it bought in batches “to implement the consensus achieved by state leaders.”

Bulk carrier Spitha is en route to China after loading soybean at the Export Grain Terminal in Longview, Washington, according to vessel tracking and USDA inspection data. EGT is a joint venture between Itochu Corp. and Bunge Ltd.

U.S.-China trade discussions are “coming along very well,” Trump said in a Cabinet meeting at the White House Wednesday.

With the U.S. government shutdown, there won’t be any USDA confirmation if purchases are made. Despite speculation, traders said Wednesday that there were still no Chinese bids for other feed grains such as corn or sorghum.

“We heard indications out of China that buyers could come for U.S. corn in January, but we have yet to see confirmation,” said Arlan Suderman, chief commodities economist in Kansas City, Missouri for INTL FCStone. “Supplies are ample, but the balance sheet would quickly tighten if China re-enters the market with significant purchases.”


©2019 Bloomberg L.P.

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Spell Check

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Sioux Falls, SD
1/3/2019 12:46 PM

  Don't be fooled by Trump. Prices are not going to "go through the roof" because of his policies. If we are lucky if the prices might go back to where they were before the tariff BS. The Trump family sells condos and whatever with falsely inflated information numbers. There are articles all over the internet that tell us what really happens. It's good to be optimistic and not miss opportunities but even better to be realistically solvent and not in bankruptcy court.

Jonesboro, AR
1/3/2019 04:46 PM

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