China ramped up Soybean purchases from Brazil last week, despite President Trump showboating a potential $50 billion agriculture deal with Beijing.
Multiple traders told Reuters that Brazilian soybeans are more appealing to commercial importers, especially ones from China, who are looking for deep discounts.
As of last week, Beijing hasn’t lifted 25% tariffs on US soybeans nor granted new waivers to state-owned businesses, indicating that China isn’t ready to buy US agriculture products, as of late October.
China typically sources most of its soybeans from the US between October and January, then from South American countries in early 1Q. But this year, according to traders, as the trade war continues to escalate to the point of return, China is abandoning US markets despite positive sentiment from President Trump’s tweets.
U.S. vs. Brazil (Market share of China's total soybean imports) pic.twitter.com/8tYdlbWbrT
— Michael McDonough (@M_McDonough) October 9, 2019
Since Monday, traders said China purchased eight bulk carrier cargoes of soybeans from Brazil, or about 480,000 tons, worth $173 million.
Brazil is China’s top soybean supplier, and Reuters made an interesting point, “large purchases from South America are unusual at this time of year with the US harvest coming in.” Translation: China isn’t buying US soybeans, so President Trump’s tweets about agriculture purchases are meaningless at the moment and are only used to calm fears of Midwest/Central US farmers.
President Trump and his administration spent several weeks pumping headlines through different wirehouses and even on Twitter, about a breakthrough deal and massive agriculture purchases China was performing.
Three US soybean exporters told Reuters that China logged zero sales with the US last week, along with no transactions at the USDA.
“I’ve not had any inquiries at all for US (shipments),” said one of the US soybean exporters. “There were a few November boats bought from Brazil and several new-crop South American boats for March forward but nothing here.”
Another US exporter said a drop in Brazilian soybean prices triggered boatloads of new purchases by China last week.