China soy buys finally start to kick in
On June 11, the U.S. Department of Agriculture’s Foreign Agricultural Service announced that private exporters reported 720,000 metric tons of soybean sales to China. Of the total, 63,000 metric tons is for delivery during the 2019-2020 marketing year and 657,000 metric tons is for delivery during the 2020-2021 marketing year. The marketing year for soybeans began Sept. 1.
For months, soy growers have been anxiously waiting for China to start fulfilling its pledges to ramp up its purchases of United States soybeans under Phase 1 of the trade agreement it signed at the beginning of the year. Then came COVID-19 and uncertainty about what China would do, given clauses within the agreement that allowed it to delay the purchases by claiming economic exigency. The COVID-19 crisis was quickly followed by further tensions between China and the U.S. over Hong Kong, telecommunications giant Huawei and other issues, accompanied by a war of words.
The June 11 reported sales were the largest in 16 months, since February 2019. But overall soybean sales remain well below 2018 levels. In the week ending June 4, exporters had sold 1 million tons, including 337,000 tons to China and 213,200 to unreported destinations, some of which may be in China. China has been buying up most of Brazil’s soybean crop, but the Brazilian currency has been appreciating, making their beans more expensive. “The Brazilian real has been strengthening slightly against the dollar, which is good for U.S. soybean exporters,” said Mike Steenhoek, executive director of the Soy Transportation Coalition. “A few years ago, though, it was three to the dollar; now it’s five.” Steenhoek said he expects further Chinese buys of U.S. beans, but couldn’t predict their volume.
Exporters are required to report to USDA any export sales activity of 100,000 tons or more of one commodity, made in one day, or quantities totaling 200,000 tons or more in any reporting period, except 20,000 tons for soybean oil, made in one day to one destination or quantities totaling 40,000 tons or more in any reporting period, by 3 p.m. Eastern time on the next business day following the sale. Export sales of less than these quantities must be reported to USDA on a weekly basis.
David Murray can be reached at [email protected].
