China halted imports of US soybeans two weeks after the trade truce

China’s purchases of American soybeans appear to have stalled less than two weeks after the United States announced a sweeping trade truce, marking a warming of relations between the world’s two largest economies, Bloomberg reports.

After a flurry of orders late last month, marking the first of the season, China’s imports of American cargoes appear to have slowed, according to traders who requested anonymity discussing confidential information. They said they were unaware of new shipments. The pause heightens uncertainty about whether the world’s largest consumer of American soybeans will be able to import as much as the Trump administration has said it expects.

Washington said Beijing has committed to buying 12 million tons of soybeans by the end of this year, followed by 25 million tons annually for the next three years. China has not yet confirmed the specific purchasing commitments outlined by the Trump team, but Beijing has reduced tariffs on U.S. soybeans and lifted import bans for three U.S. exporters, including CHS Inc., in response to similar conciliatory moves by the U.S.

“Many in the industry believe that China’s reported intention to purchase 12 million tonnes of U.S. soybeans is more of a diplomatic gesture than a firm trade deal,” said Kang Wei Cheang, an agricultural broker at StoneX Group Inc. in Singapore.

In recent months, China has been buying massive volumes of South American soybeans in an effort to diversify its supply sources. Therefore, Chinese demand is expected to decline in the coming months, regardless of a trade deal with the U.S., according to Vitor Pistoia, senior grains and oilseeds analyst at Rabobank.

Chinese crushers will need to secure some supplies in December and January before new crop shipments from leading exporter Brazil begin, but some industry estimates suggest only a few million tons. This still falls significantly short of Washington’s US purchasing target for this year.

Furthermore, traders say US soybeans are still subject to a 13% tariff, and crushing them would result in significant losses, leaving Chinese commercial crushers with no incentive to order US cargoes.

According to StoneX’s Cheng, US soybeans are also trading at a premium to South American ones, partly due to the sharp price increase following the trade deal announcement.

He added that with Brazilian planting proceeding normally and new crop shipments expected by late January or early February, Chinese buyers are reluctant to purchase large volumes from the US for short-term supply.

Traders say recent purchases of American soybeans were made by Chinese state-owned companies, with a significant portion possibly intended for government reserves. For commercial buyers, the trade truce has reopened the field for American supplies, which are now competing with Brazil for a rapidly closing sales window.

Tags: soybean, USA, China