June 2, 2020

 

Chinese firms buy US soybeans even after government orders to stop purchases

Three cargoes of soybeans from the United States have been purchased by China state-owned companies, even after China's government ordered these companies to stop purchases, Reuters reported.

 

The order from China's government came after the US said it will stop special treatment for Hong Kong.

 

Three US traders that are informed of the deal said the three cargoes of soybeans totaling 180,000 tonnes are to be shipped in October or November this year. This is during the peak soy export season for the US, when it is usually the cheapest in the world. 

 

The traders said these purchases aren't sufficient to cover China's soybean needs for those months.

 

Two sources told Reuters that China had told state-owned companies to stop large purchases of pork and soybeans from the US. One of the sources added that US corn and cotton purchases have also been suspended.

 

Recently, China's state-owned companies purchase 1 million tonnes of soybean or more.

 

The sources said China will suspend more US imports if the latter announces more action on Hong Kong.

 

China pledged to buy an additional $32 billion worth of US agricultural imports over two years (above what was purchased in 2017) in the Phase 1 trade deal signed between both countries in January.

 

10,000 to 20,000 tonnes of pork imports from the US to China have already been cancelled. Another source told Reuters that China is prepared to scrap the Phase 1 deal if US President Donald Trump continues to target China.

 

Corn, wheat and lean hog futures in the US fell on Monday due to trade tensions, while soybeans remained flat.

 

The US Department of Agriculture (USDA) said China purchased US$1.028 billion worth of soybeans in the first quarter of this year, along with US$691 million worth of pork. China had also imported wheat, corn and soyoil from the US in 2020.

 

Private Chinese purchasers have not been given any orders from the government to stop purchases, but commercial buyers are concerned.

 

In recent weeks, China had bought soybeans from Brazil as it is Brazil's peak export season.

 

-      Reuters