China delays purchases of US soybeans

Markets had expected China to quickly sign major contracts for US soybean purchases following a recent meeting between representatives of the two countries. However, no immediate orders followed. StoneX Group commodity economist Arlan Suderman believes China may step up purchases later in the autumn, although new contracts could take several more weeks to materialize.

According to Suderman, market expectations for China’s rapid return to large-scale US soybean purchases were too high. China may delay signing contracts in anticipation of further price declines. As a result, market participants remain uncertain about how quickly the country will resume active buying.

In late September, the Office of the US Trade Representative published details of the “30-for-30” trade framework. It provides for more favorable tariff treatment for around $30 bln worth of goods on each side, including certain agricultural products. These provisions are separate from China’s existing commitments to purchase US agricultural products.

The list of goods covered by the framework includes corn, grain sorghum and wheat. However, China does not urgently need large volumes of each of these crops. To meet its target of purchasing $17 bln worth of US agricultural products annually, in addition to 25 mln t of soybeans, China will likely need to spread its purchases across different commodities.

While China has yet to return to active buying, the market continues to absorb the seasonal arrival of the new crop. Suderman expects Chinese buyers could resume purchasing US agricultural products in the coming weeks, but advises market participants to be patient.

Tags: China, soybean, USA