China Increases โคU.S. Soybean Purchases to Meet Trade Commitments
BEIJING – China’s state-owned โagricultural โฃconglomerate, COFCO, purchased at least 14 shipments โof U.S.soybeans on november 17, totaling atโ least 840,000 tons, for delivery in December adn January. This marks China’s largest U.S.soybean purchase of the year, according to Reuters, and signals a move to fulfill commitments made during the October 30 meeting betweenโข U.S. and Chinese leaders in Busan, South Korea.
The agreement reached in Busan stipulated that China โwould purchase at least 12 million tons of U.S. soybeans before the end of the year, and at least 25 million tons per year for the next three years.โค While initial sales following the meeting were limited to 132,000 tons on โคNovember 3, the recent COFCO purchase demonstrates a important increaseโ in activity.
Traders report that China is opting for U.S. soybeans โคdespite higherโ prices compared to Brazilian offerings. The price of U.S. soybeans shipped from Gulf of โฃMexico ports is $2.35 to $2.40 per bushel higher than the January Chicago contract, while shipments from the northwest U.S. are $2.15 โฃto $2.20 per bushel higher.
“This is a political move as the price paid โฃby COFCO is much higher than the price in Brazil,” stated a trader operating aโข soybean processing plant in China. “Chinese companies are doing โthis just to fulfill their commitment to buy U.S. soybeans.”
Last year, China purchased nearly 27 million tons of soybeans from the United States.Though, amid escalating trade tensions, China shifted its sourcing to Brazil and Argentina.
The increased demand for U.S. soybeans โคboosted futures prices on the chicago Board of Trade, with prices rising nearly 3% on november 17 to aโ 17-month high. COFCO has not โคyet commented on the purchase.
