China’s U.S. soy bookings hit 6-year highs

A Chinese ship is loaded with soybeans at Port of Santos May 19, 2015.  REUTERS/Paulo Whitaker

China has returned in full force to the U.S. soybean market following the trade dispute that began two years ago, giving American exporters hope that the upcoming shipping season will be their most successful in three years.

The Phase 1 trade deal signed at the beginning of this year implied China must book record or near-record volumes of U.S. soybeans through at least the end of 2021. Despite historically light purchases in the first few months of 2020, the Chinese seem to be making up for lost time, at least for now.

In addition to the Phase 1 agreement, Chinese feed demand is expected to rise from last year as it builds back up the hog herd after huge losses from African swine fever. Some market analysts also expect China may build soybean reserves.

As of July 16, China had booked 6.1 million tonnes of U.S. soybeans for the 2020-21 U.S. marketing year that begins Sept. 1, according to the U.S. Department of Agriculture. That is China’s largest volume of new-crop soybeans for the date since 2014, and most of this year’s purchases occurred over the last several weeks.

The only other years besides 2014 in which China’s mid-July new-crop soybean purchases were larger than this year were 2011, 2012 and 2013.

Soybean sales for 2020-21 to all destinations as of July 16 totaled 10.4 million tonnes, also a six-year high. However, non-Chinese bookings stood at 4.3 million tonnes, which is around average for the date.

China is by far the largest buyer of U.S. soybeans and that has held true despite the trade war. But other customers may need to account for at least 40% of annual U.S. shipments, so that number must also be monitored.

MORE SOYBEANS

China has remained active in the U.S. market since July 16, booking a minimum of 1.04 million tonnes of soybeans in the days since. That is the total amount that has been confirmed through USDA’s daily reporting system, sometimes called flash sales, which publicizes daily U.S. grain and oilseed purchases above a certain tonnage.

USDA this month has flashed some 7.78 million tonnes of U.S. grains and oilseeds through July 23, the most for the full month in at least seven years. Corn accounts for 52%, soybeans 44%, and wheat occupies the rest.

Some 84% of those daily sales have been to China and another 14% were purchased by an unknown buyer. In the soybean market, “unknown” buyers are typically assumed as China since it is the top customer.

USDA announced that China bought 132,000 tonnes of new-crop soybeans on Thursday, and that was the eighth trading day in a row that contained one or more flash sales.

Many market participants have welcomed the flurry of Chinese bookings but have also wondered how long the streak will last. Saying that Brazil has shipped a record volume of soybeans to China this year would be a huge understatement, so it is uncertain how many more shipments of soybeans the Asian country will actually need.

The most new-crop U.S. soybean sales to China by the end of July was 11.7 million tonnes in 2013 for the 2013-14 marketing year. China imported 70.4 million tonnes of soybeans from all suppliers in 2013-14, and the 2019-20 estimate is some 36% higher at 96 million tonnes.

Brazil’s 2019-20 soybean crop was some 45% larger than its 2013-14 harvest, which at the time was a new record. Brazil first took a small lead over the United States as top soybean exporter in 2012-13, but the South American country’s exports in 2020-21 are expected to be almost 50% larger than their U.S. counterparts.

CHINA BIG IN CORN

U.S. corn sales for the upcoming marketing year stood at 7.7 million tonnes on July 16, the most for the date since 2013. China’s 3.8 million tonnes is record-large, but corn sales to all others are just average and possibly lackluster when compared with the Chinese bookings.

There has not been a daily corn sale to China in the days since, but on Tuesday an unknown buyer purchased 207,880 tonnes of U.S. corn, some 88% for delivery in 2020-21. In the corn market, unknown buyers may often be Mexico, the top customer for the U.S. product.

Mexico had booked 2.04 million tonnes of new-crop U.S. corn as of July 16, giving China’s purchases the largest margin in recent memory, and likely in history, over those of the United States’ southern neighbor.

Source: Reuters

LEAVE A COMMENT

×

Comments are closed.