Soybean demand surges , as China purchases at least 4 U.S cargoes

Importers In China have bought at least four cargoes, which equates to around 240,000 tonnes, of soybeans from the United States on Monday for shipment starting in early July, two traders familiar with the deals said.

More sales are likely to happen as a firm which is Chinese state-owned has sought offers for up to 20 cargoes shipped from July to November from terminals along the U.S. Gulf Coast or the Pacific Northwest, the traders reported.

The Chinese have stepped up their importing purchases with the U.S, with whom they have vowed to increase their agricultural imports with, as part of a Phase 1 trade deal that Beijing had signed with the United States back in January.

Late last month soybean prices plummeted to the lowest in nearly a year as the coronavirus pandemic dragged down demand for feed and fuel and upended food supply chains.

China, the world’s largest soybean importer, has been relying heavily on cheaper, freshly harvested South American soybeans, usually sourced from Brazil in recent months. A strong U.S. dollar DXY and a historically weak Brazilian real have further encouraged purchasing from South America.

Monday’s U.S. soy purchases follow a series of U.S. farm commodities deals signed by Chinese importers since late April.

30 million tonnes of U.S. crops have been set aside by China to be bought up, including 10 million tonnes of soybeans, for state stockpiles to assist in protecting itself from disruptions to its supply chains caused by the coronavirus pandemic.

More than 3 million tonnes have been sold to China so far in 2020, but that is some way short of the 10 million tonnes of U.S. soybeans booked by China for July last year, according to the U.S. Department of Agriculture data.

China vowed to increase purchases of U.S. farm goods by at least $12.5 billion in 2020 and $19.5 billion in 2021 as part of the phase 1 trade deal signed by Beijing, over the 2017 level of $24 billion. Soybeans, which are the most valuable U.S. agricultural export from the U.S are expected to represent a significant share of that.

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