🤯 Have you seen our AI stock pickers’ 2024 results? 84.62%! Grab November’s list now.Pick Stocks with AI

China’s Soy Buying Spree May Signal Prudence Before U.S. Talks

Published 03/10/2019, 09:21
Updated 03/10/2019, 10:00
© Reuters.  China’s Soy Buying Spree May Signal Prudence Before U.S. Talks
ZS
-

(Bloomberg) -- Chinese firms have been snapping up U.S. soybeans this week, but don’t mistake this as a sign of buyer confidence in upcoming trade talks.

The companies, which received a fresh 2 million-ton quota from Beijing to import American beans free of retaliatory tariffs, have been seeking soy every day so far. That’s likely because they want to rush through orders in case the talks fail and imports are halted, said Darin Friedrichs, a senior analyst at INTL FCStone’s Asia commodities division.

“The Chinese soybean purchases are a necessity and may be a sign that the crushers want to get these grades in quickly because things could change on talks,” Friedrichs said.

The wariness of commodity traders is perhaps understandable given the whipsawing in relations between President Donald Trump and counterpart Xi Jinping over the past year. Chinese firms were issued tariff waivers in July as Beijing offered Washington an olive branch, only to see shipments stopped about a month later after talks fell apart. Top negotiators from the two countries are expected to meet in Washington on Oct. 10.

The purchases may also be because it makes financial sense right now. Margins on crushing U.S. soybeans in China are higher than those of rival Brazil thanks to the lower prices of American soy when retaliatory tariffs are removed.

Chinese state-owned and private firms bought at least 6 cargoes of U.S. soy, equivalent to about 400,000 tons, said people familiar with the purchases, asking not to be identified because the information is private. That’s on top of 12 to 15 cargoes, or 1 million tons, purchased earlier this week.

No one answered calls to China’s commerce ministry during the National Day holiday, and a fax seeking comment wasn’t immediately responded to.

November soybean futures were little changed at $9.13 a bushel by 4:11 p.m. Singapore time. Prices have gained 3.4% so far this week.

Latest comments

Risk Disclosure: Trading in financial instruments and/or cryptocurrencies involves high risks including the risk of losing some, or all, of your investment amount, and may not be suitable for all investors. Prices of cryptocurrencies are extremely volatile and may be affected by external factors such as financial, regulatory or political events. Trading on margin increases the financial risks.
Before deciding to trade in financial instrument or cryptocurrencies you should be fully informed of the risks and costs associated with trading the financial markets, carefully consider your investment objectives, level of experience, and risk appetite, and seek professional advice where needed.
Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. The data and prices on the website are not necessarily provided by any market or exchange, but may be provided by market makers, and so prices may not be accurate and may differ from the actual price at any given market, meaning prices are indicative and not appropriate for trading purposes. Fusion Media and any provider of the data contained in this website will not accept liability for any loss or damage as a result of your trading, or your reliance on the information contained within this website.
It is prohibited to use, store, reproduce, display, modify, transmit or distribute the data contained in this website without the explicit prior written permission of Fusion Media and/or the data provider. All intellectual property rights are reserved by the providers and/or the exchange providing the data contained in this website.
Fusion Media may be compensated by the advertisers that appear on the website, based on your interaction with the advertisements or advertisers.
© 2007-2024 - Fusion Media Limited. All Rights Reserved.