January 23, 2024

USDA confirms 297,000 metric tonnes of soybean sales to China

The US Department of Agriculture (USDA) has officially confirmed private sales of 297,000 metric tonnes of US soybeans to China, the first soybean sales under the USDA's daily reporting rules since December 19, 2023 and notably, the first to China, the world's leading buyer of soybeans, since December 15, 2023. Channel News Asia reported.

The confirmation of these sales closely follows a meeting between US Agriculture Secretary Tom Vilsack and China's Minister of Agriculture and Rural Affairs, Tang Renjian. The timing of the announcement coincides with a recent 6% decline in Chicago Board of Trade (CBOT) soybean futures since the beginning of the calendar year. The benchmark contract experienced a dip to US$2.01 a bushel last week before stabilising in early moves.

The downward pressure on soybean futures can be attributed to improved crop weather conditions in Brazil, the largest global producer and exporter of soybeans. Despite weeks of drought, Brazilian production prospects remain uncertain, and the market is anticipating an influx of Brazilian supplies in the coming weeks.

Additionally, the USDA's January 12 estimates of US 2023/24 soybean production, ending stocks, and December 1 stockpiles exceeded most trade expectations, alleviating concerns about supply shortages. China, a key player in soybean trade, has already booked 20.2 million metric tonnes of US soybeans in the current marketing year that began on September 1, down from 27.2 million tonnes in the previous year.

While the USDA has projected China's global 2023/24 soybean imports to be at 102 million tonnes, an increase from the 2022/23 figure of 100.85 million, recent challenges in China's extensive swine sector are expected to lead to a reduction in first-quarter soybean imports to a four-year low.

-       Channel News Asia