Recently, China has made such a huge purchase of American soybean that the discussion on it has intensified in the global market. According to available information, China has purchased at least 10 cargoes of soybean from the US since Tuesday, the total value of which is said to be around $300 million. This purchase has taken place at a time when a day earlier there was a phone conversation between Chinese President Xi Jinping and US President Donald Trump.
Let us tell you that there was a trade dispute between the two countries for the last few months, but in recent weeks the atmosphere has softened a bit. It is noteworthy that after this conversation, Trump had said that he urged China to increase the purchase of American goods, especially agricultural products, and Xi has responded positively to this.
According to trade sources, China has purchased 10 to 15 cargoes, each cargo of which is about 60,000 to 65,000 metric tons of soybean. All of these cargoes will be shipped from US Gulf Coast terminals and Pacific Northwest ports in January. Interestingly, China has made this purchase when the price of American soybean is higher than that of Brazil.
According to the information, the price of soybeans shipped from the US is at a premium of $2.3 per bushel from the Gulf and $2.2 per bushel from the Pacific Northwest compared to January futures, while the price from Brazil is only $1.8 per bushel. Experts say at such high prices, commercial buyers generally stay away as crush margins are not strong at these levels.
Despite this, this purchase by China is also considered important because for the last few months, China had almost stopped purchasing soybean from America. Let us tell you that after the talks held in South Korea in the last week of October, China has gradually increased its purchases. Government company COFCO has so far booked about 2 million tonnes of American soybean.
However, this is much less than the 12 million tonne purchase announced by the White House. According to available comments, US Treasury Secretary Scott Besant says China’s procurement plan is going on schedule. He said that China has signed an agreement to buy 87.5 million tonnes of American soybean in the next three years and six months, which is a big target and this latest purchase is being seen as a step in this direction.
Overall, relations between the world’s two largest economies are beginning to show some improvement, and the purchase has also created positive ripple effects in the agricultural market, which may increase further in the coming months.
