China Inc Returns to U.S. Soybean Market As Trade Tensions Ease05/24/2018
China’s state grain stockpiler has returned this week to the U.S. soybean market for the first time since early April, a sign Beijing is preparing to resume purchases as trade tensions between the world’s top two economies ease, two sources said.
As the two sides stepped back from a full-blown trade war, Washington also neared a deal on Tuesday to lift its ban on U.S. firms supplying Chinese telecoms gear maker ZTE Corp, and Beijing announced tariff cuts on car imports.
State grains buyer Sinograin asked about U.S.-origin soybean prices this week after being largely absent for the last six weeks, two sources with knowledge of the matter said.
“Sinograin is in the market today asking U.S. suppliers to make offers for shipment of old crop as well as new crop beans for shipment August onwards,” said a source who works at a private soybean crushing company in China.
Sinograin’s requests for prices were interpreted as a sign that government curbs on buying American goods had been lifted.
“It is a clear message to even private companies that it is okay now to import U.S. beans,” the source said.
Soybeans are America’s top agricultural export to China, worth $12 billion last year.
It’s not clear how or when the government communicated this, and Sinograin, Cofco and the Ministry of Agriculture and Rural Affairs did not respond to requests for comment.
A Ministry of Commerce spokeswoman said the ministry has not told state companies to increases purchases of U.S. soybeans.
One of the sources said Cofco had not yet made any purchases after buying large volumes earlier in recent months.
The sources declined to be named as they are not authorized to speak to the media.
A trader at an international trading firm said he received three equiries for DDGS from China in recent days, the first in a while.
“We have got more enquiries on U.S. products, including DDGS this week from Chinese traders, following the developments last week and over the weekend,” he said.
In November last year, Beijing removed a value-added tax on imports of U.S. DDGS, but it kept in place an 80 percent import duty, which prevented a big surge in Chinese buying.
U.S. Gulf export prices for the new soybean crop also rose on Tuesday by 4-5 cents a bushel, on a cost, insurance and freight (CIF) basis, which a U.S. trader said may indicate a revival in demand from China, the top importer of the oilseed.
The trader said exporters were lining up supplies to load vessels in October to December, with the next U.S. crop hitting the market around September.
RELIEF TO FARMERS
The news of China’s return to the market will come as a big relief to U.S. farmers, who saw orders canceled and business dry up as Washington and Beijing lobbed trade-tariff threats at one another.
The global commodities market and trade flow of goods from sorghum and corn to pork have been roiled by the dispute.
Beijing had warned in April it would hit U.S. imports of soybeans and other agricultural products with an additional 25-percent duty, after the United States had threatened to apply a similar tariff to some 1,300 Chinese products.
Source: Reuters – Reporting by Dominique Patton and Hallie Gu in BEIJING and Naveen Thukral in SINGAPORE; Additional reporting by Karl Plume in CHICAGO; Writing by Josephine Mason; Editing by Tom Hogue