China, the world’s largest consumer of soybeans, bought American-grown oilseed for a second week after largely shunning U.S. supplies earlier this year in a trade war between the two countries.
On Wednesday, the U.S. Department of Agriculture said in a statement that exporters sold 1.199 million metric tons to China for delivery by Aug. 31. China’s Cofco said in a statement that it made two purchases.
The latest sales and at least 1.4 million tons reported by the USDA follow a temporary truce in the trade war that had all but halted Chinese purchases of American beans. Government data show China buys 30 million to 35 million tons of U.S. soybeans in a normal year.
The exports to China have prevented the market from crashing but haven’t pushed prices significantly higher, said Virginia McGathey, the president of McGathey Commodities Corp. in Chicago.
The export sales failed to bolster futures prices, while strength in the cash market spread. On the Chicago Board of Trade, soybeans for March delivery fell 0.8 percent to settle at $9.13 a bushel, erasing a brief rally after the USDA announcement. The oilseed touched $9.12, the lowest for the contract since Dec. 6. Aggregate trading rose 31 percent above the 100-day average, according to data compiled by Bloomberg.
“China remains an important market for U.S. soybean farmers, and we view these recent sales, while relatively small, as important steps forward in our overall trade relationship,” U.S. Soybean Export Council Chief Executive Officer Jim Sutter said in an email Tuesday.
Before the USDA statement on Wednesday, a person with direct knowledge of the transactions said China’s state stockpiler Sinograin and food company Cofco purchased about 10 cargoes of soybeans from the U.S. Gulf region on Tuesday. Unconfirmed market speculation put those sales at as many as 20 cargoes, or about 1.2 million tons, shipped mostly through Pacific Northwest and Gulf terminals, Arlan Suderman, chief commodities economist in Kansas City, Missouri for INTL FCStone, said before the official figures were announced.
On Monday, the aggregate spot price in Louisiana near the U.S. Gulf rose 17 cents, or 1.9 percent, to $9.12 a bushel, according to data compiled by DTN.
“We are seeing firmer bids based off of additional Chinese purchases,” Tiffany Heier, a station manager at the Verona location for the James Valley Grain cooperative in North Dakota, said in an email.